Managing your money – sweet dream or nightmare?

By Anna Sofat, Founder/MD Addidi, the voice of women’s wealth

I have been advising women about their money for over 20 years, and whilst I have seen change beyond recognition in some areas, such as financial independence for women, there has been a red thread that has stemmed my entire career. The majority of women do not engage with the financial services industry, and do not invest.

Often the blame is laid at our door – we are too cautious, we don’t save enough, we don’t seek advice! For me, the blame can be laid squarely at the door of an industry that was built by men for men, which has been slow to change. The industry is full of jargon, the latest star manager or investment fad usually being sold by a predominantly white male financial advisors.  

Let’s break down some of the myths here:

  1. Women don’t save – rubbish, women are good savers and we actually save more than men, we just keep more in cash at bank!
  2. Women are risk averse – not true, we are considered risk takers and want to understand the ins and outs before we commit to an investment. However, the industry is impatient for a sale.
  3. Women don’t invest – it’s true that we invest less in the markets than men but when we do, we make good investors as we trade less and take more of a long term view.

A few other insights we are not appreciated for:

  • We like to engage with our money so we want to invest more sustainably and for impact.
  • We like to touch and feel so property is an investment vehicle we are comfortable with.
  • We invest more in our families and communities.

So if you are someone who has yet to invest in the markets (through a stocks & shares ISA or a pension), then it’s never too late, not even if you are in your 50’s or even 60’s. So how should you go about it?

First of all, take time to understand whether you need a financial plan and an investment plan?

A financial plan is route map to get you from where you are right now to where you are living the life which is as near to your idyllic as possible – whether that’s financial freedom at age 50, retirement at 60, or living as a disruptive retiree in your 70s. A financial plan reviews what assets you currently have and outlines a strategy for getting you to your goalpost. It’s like having a business plan for yourself!

An investment plan simply looks at your cash, investments and pensions (or lack of) and recommends a strategy to deliver the returns you require at a level of risk you can afford and are comfortable with. 

Many clients come to us because they are at a point in their lives, often their 50s, when they need to do something about retirement (saving or taking benefits) and they can no longer ignore the niggle at the back of their head.  

A good financial planner (you want someone who is a Certified, not just Chartered, Financial Planner) will work with you to construct a financial plan with and for you. It’s never too late.

One of my clients came to us when she was 54, separated, no savings and no home! She was worried about her life when she could no longer work – she had a decent enough pension and salary, but little else. She was struggling to save for a deposit and wasn’t even sure if she would be able to get a mortgage approved alone.

We agreed a 15 year financial plan with her and worked with her to save for a cash deposit – this was hard as she tended to impulse buy when she was feeling emotionally drained. The financial plan showed her what was possible and we understood her well enough to know what would work. At 62, she now has a home she loves, is still in the same job, has a partner and we are now focused on her paying off the mortgage by the time she is 66 (instead of the 70 we had originally planned for!). We can’t wave a magic wand but systematic planning and ongoing discipline can work wonders to change direction for the better.

So where do you start? Start with your assets and liabilities, as a rough rule of thumb you are going to want assets equal to at least 20 times your required income in retirement – if you are near to 40 times, you should not run out of money.

Many women are too heavily invested in cash – this won’t work in retirement unless you have sufficient cash to meet your needs for a good 20-30 years. So get yourself an investment plan – either learn about the stock market and use a DIY investment platform (such as AJ Bell and Hargreaves) or work with a Chartered Financial Planner to establish a trusting relationship.

Many women are too heavily invested in cash

Many women are also too heavily invested in property. If you need to access the capital tied up in the property then get yourself a financial plan as to how you are going to utilise your assets for your needs (work with a Certified Financial Planner, maybe even one qualified in life planning) to work through the numbers, tax and timelines. If you are confident with numbers and quick to learn, then you can put together your own plan too!

Many women are too heavily invested in property

On the other hand, if you have some unhealthy money habits then perhaps work with a financial coach to develop some good habits, before you commit to an investment or financial plan.

Through my experience I have found women to be more financially savvy than they give themselves credit for. We are generally quite hard on ourselves and can feel guilty about spending money, especially when we have families.

Remember, it’s never as bad as you might think; often it’s our insecurities which tend to build up in our minds and alter our ability to think practically.

About the Subject Expert: Anna Sofat

Anna Sofat is founder and MD of Addidi, the Voice of Women’s Wealth.  Addidi advise enterprising women, and their families, to plan and manage their wealth as well providing a collaborative club for women to invest in and engage with SMEs. Addidi recently won Money Marketing’s Small Advisor of the Year award and has featured as one of the Top 100 Advisory firm by the New Model Adviser magazine in 2012, 2013, 2014, 2015, 2017 and 2018.   She has been awarded the’s Financial Adviser of the year award; nominated the Top female Adviser by FT’s Financial Adviser in 2015 and was a finalist in the First Women 2017 Awards for the Finance category.

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