Hey ladies! Here's how to raise your financial IQ

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Women exhibit all the attributes of excellent investors, outperforming their male counterparts in most studies. (Source: dolgachov via 123RF) Women exhibit all the attributes of excellent investors, outperforming their male counterparts in most studies. (Source: dolgachov via 123RF)
Financial expert Nancy Tengler sat down with our Olivia Fierro Monday morning. (Source: Good Morning Arizona) Financial expert Nancy Tengler sat down with our Olivia Fierro Monday morning. (Source: Good Morning Arizona)
'[W]e have not taught our young women that investing is important to their financial security," Tengler said. '[W]e have not taught our young women that investing is important to their financial security," Tengler said.
(GOOD MORNING ARIZONA) -

By Nancy Tengler

If, like Rip Van Winkle, I fell asleep in the early 1980s (when I entered the investment business) until now -- some 30-plus years -- I would, unlike the legendary Rip, find that not very much has changed regarding women and investing.  

Despite advances in every field, the number of professional women investors has actually declined. In an unintended oversight, we have not taught our young women that investing is important to their financial security. We have excused them from the conversation it would seem, and in doing so, we have handicapped their ability to ensure financial security. 

In a recent article published by ThinkAdvisor, Bernice Napach reveals that women make up a shrinking share of fund managers in 2018 compared to 1990.

Women now make up 11 percent of managers of actively managed mutual funds. In 1990, the percentage of funds managed by women was significantly higher. Over that 18-year period, the number of mutual funds has grown fivefold and men have captured 85 percent to 90 percent of new portfolio manager jobs according to the fund measurement firm Morningstar.  

Why should we care? Two reasons.

  1. Women exhibit all the attributes of excellent investors, outperforming their male counterparts in most studies.
  2. Women tend to live longer than men and consequently need more money and financial acumen to achieve a comfortable and secure retirement.

In my book, "The Women’s Guide to Successful Investing: Achieving Financial Security and Realizing Your Goals," I encourage women to raise our financial IQ and to take control of our financial future.  

Studies show that 70 percent of women characterize themselves more as savers than investors. But it is the saving to invest that actually creates wealth.

Women also demonstrate less willingness to take risk than men. Taking a conservative approach to investing is definitely an advantage; it is a trait that contributes to women’s superior investment returns when compared to men. But, avoiding risk altogether will not achieve financial security. Over the long-term, investing is not the risky activity. It’s the not investing that contains the most risk to generating wealth. 

Investing is not gambling or a magical mystery unavailable to the average woman who is home raising a family or working outside the home and raising a family.  

Peter Lynch, the great growth investor argues, “Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”  

And he is right. The average woman can invest as well as or better than professional money managers simply by looking for companies with products we know and use in our everyday lives.  

All of us can save more.

For illustrative purposes let us imagine you are able to save $100 per month. And let’s assume (since interest rates are on the rise) that you are somehow able to earn 2.5 percent at your local bank. In 25 years you will have accumulated just under $42,000.

However, if you invested in an S&P 500 index fund (assuming the average annual return from stocks since the early 1900s of 9 percent) you would have approximately $113,000 at the end of that same 25-year period.  

Look around you and pay attention to the great companies whose products you love.

Are you a Starbucks customer? Costco? Do you use Johnson and Johnson products or Proctor & Gamble? I love my Apple products. Walmart, Amazon, Netflix -- you get the idea.  

And then with your savings -- you can open a brokerage account with a zero balance or $100 at most discount brokerage firms like Charles Schwab or TD Ameritrade -- buy one or two shares of your favorite companies over time.  

These investments are for your future, not for near-term needs. Then, as Warren Buffett advises, don’t look at them every day. Live your busy life and let the company managements grow the value of your investment.  Buy companies you can own for a lifetime and you will reap the benefits in the years to come. 


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