New Zealand’s leading personal finance expert is imploring women to “be a bit braver” with their money, saying a reluctance to take risks is leaving many worse off in the long run.
In a new interview with Petra Bagust for Rova podcast Grey Areas, Mary Holm – journalist and author of A Richer You – said many women take too conservative an approach to their finances so aren’t fully realising the potential of their money.
Holm said women can also be more prone to panic than their male counterparts in the face of market volatility, sometimes leading to disastrous results.
“I'm getting all these letters from people saying, ‘oh, my KiwiSaver has gone down $10,000 or $50,000, what do I do?’ – and the answer is nothing,” she explained.
Adding, “When the markets go down, as they are right now… do nothing. Just stay there and it'll come right. If you panic and move from the higher risk [fund] you're in now down to the lower risk [fund], then you're making that loss real – you're making it a loss."
"Holm told Bagust it can be disempowering for women who don’t feel like they understand their finances – but encourages them that it can actually be really simple."
She said one good approach for those who default to a conservative approach because they don’t feel confident managing their finances is to take a risky approach with a small amount of money.
She suggests transferring 10-20% of your money into a higher-risk KiwiSaver fund and simply riding it out and watching as the market fluctuates.
“Hang in there, and in the long run it will grow more than the other money – and then gradually move more that way.”
Holm said it’s easier than ever to experiment with your money, thanks to online investment platforms like Sharesies, Hatch and Stake that are cheap and allow you to invest small amounts at a time.
“It's good to see people out there playing a little bit actually, in these sort of markets. But don't do that, certainly not with Bitcoin but even any individual share with a big chunk of your money,” she said.
“You really do want to spread your money – your serious money, your retirement money or your house savings – and the easy way to do that is in a KiwiSaver or related non-KiwiSaver fund.”
Among Holm’s other tips was to invest in index funds rather than individual stocks because they're passive and diversified, meaning they’re lower risk and more likely to perform better over the long term.
She also strongly encourages everyone to enrol and contribute to KiwiSaver, saying it makes her “so sad” when she hears of people that haven’t got around to it and are missing out on hundreds of dollars in free money each year as a result.
If you contribute 3% or more of your pay to your KiwiSaver account, your employer is required to contribute 3% themselves.
And even if you're not an employee, for every $1 you put in (up to $1042), the Government will contribute $0.50 - which means you could be getting a bonus $521 each year.