Tag: Investing

Required Minimum Distributions (RMDs): Rules Investors Should Know

Published in: Resources |

The end of the year is usually when retirees have to take their required minimum distributions (RMDs). However, this year, seniors don’t have to take them. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law in March 2020, allows anyone to forgo the usually mandatory annual withdrawals from their retirement savings.

The CARES Act waives the rules for RMDs for the 2020 tax year, but it’s still important to understand the ins and outs of RMDs. Here, we answer some frequently asked questions:

FAQ About RMDs

1. Why do RMDs exist? Is it just to prevent investors from deferring paying taxes on retirement assets indefinitely? 

Traditional IRAs and other retirement accounts such as 401(k)s allow taxpayers to contribute pre-tax earnings that can grow tax-deferred until withdrawal. The required minimum distribution (RMD) ensures that these earnings are eventually taxed. The required distributions are calculated based on life expectancy so that the account is gradually depleted over the lifetime of the taxpayer.

2. How does the SECURE Act change the initial age threshold for RMDs? Is a good or bad thing for investors?

Previously, account holders were required to begin taking RMDs in the year they turned 70.5 (with a deadline of April 1 for the first RMD only). The SECURE (Setting Every Community Up For Retirement Enhancement) Act, which passed in December 2019, allows those account holders who have not yet begun distributions to delay their first RMD until the year they reach age 72. The delay will afford investors additional time for tax-deferred growth, as well as postpone the inevitable tax bill.

3. How do RMD deadline rules work for a 401(k) vs. an IRA?

The SECURE Act also delays RMDs to age 72 for 401(k)s and other defined contribution plans. There are some exceptions for people who continue to work beyond age 72.

4. Can you offer some strategies to avoid the penalty for not taking RMDs on time?

If you fail to take your RMD on time, the penalty is 50% of the RMD amount. Set a reminder for yourself to take your first RMD, as you would for any other significant obligation.

You can take your RMD at any time during the year, so you may choose to take your distribution early to avoid a last-minute scramble. Some people break the distribution into monthly payments, or take a lump sum early in the year as part of their tax preparation process. One of our clients, for instance, likes to take the distribution on their birthday to celebrate all of their disciplined years of saving.

5. Is there ever a scenario where a Roth account would be subject to RMDs?

RMDs are not required for Roth IRAs. Withdrawals from Roth IRAs are not taxable because the contributions were made from earnings that had already been taxed. The IRS has no incentive in requiring distributions.

The only scenario in which RMDs apply to a Roth IRA is if you inherited it from someone who wasn’t your spouse before 2020. Before the SECURE Act, non-spouse beneficiaries of traditional and Roth IRAs were required to take RMDs based on their lifetime. However, now that the SECURE Act is in effect, those beneficiaries must withdraw the full balance of the IRA within 10 years, whether it’s a traditional IRA or a Roth IRA.

6. Are there any other rules to know about taking RMDs?

If you have multiple IRAs, you must calculate each account individually, but you can take your total RMD amount from just one IRA or a combination of IRAs.

If you inherit an IRA or a 401(k), you can no longer stretch the RMDs from those accounts over your lifetime. Beginning in 2020, non-spouse beneficiaries of inherited IRAs will be required to distribute the full balance of the account within 10 years. This applies to Roth IRAs as well.

A strategy for reducing the tax impact of an RMD is to use a portion of the distribution to make a qualified charitable distribution (QCD). The amount of the QCD is excluded from your taxable income up to the amount of the RMD and not in excess of $100,000.

Have Any Other Questions About RMDs? Reach Out to Our Team

At The Humphreys Group, we’re passionate about helping investors gain financial confidence and own their financial power. And that starts with knowledge. If you have any other questions about RMDs and the rules for this year due to the CARES Act, reach out to our team today.

How to Improve Your Financial Literacy During the COVID-19 Pandemic

Published in: Resources |

The financial literacy gap between men and women is from structural, systemic and societal inequalities and barriers over time. (One example: It wasn’t until 1974 — with the passage of the Equal Credit Opportunity Act — that women won a legal right to apply for credit cards separate from their husbands.)

Why the Financial Literacy Gap Is So Important

The financial literacy gap — also known as the  “secondary gender wage gap” — is so important because without financial literacy, women can’t build their wealth. They feel less confident being in control of the household finances, and this becomes an even bigger issue when their spouse passes away or if they go through a divorce. Women also may feel less confident about investing in the stock market. And women already earn less than men — without the financial knowledge about investing, they are at even more of a disadvantage.

Other financial hindrances? Women tend to live longer than men, which can make them financially insecure during retirement. Women are also often expected to leave the workforce during their high-earning years to take care of their children or aging parents. The COVID-19 global health and economic crisis, and how it has disproportionately affected women, has further underscored these issues.

Steps You Can Take to Improve Your Financial Literacy

Now that we know what we’re up against and understand why it’s so important to arm ourselves with financial knowledge, what steps can we take that are in our control?

  1. Listen to podcasts and books about personal finance. You don’t have to read a dense tome about finance. Listen or read something that you would enjoy.
  2. Find out what financial wellness programs are available at your workplace. Many employers offer workshops and programs on financial topics, such as understanding your 401(k), health savings accounts (HSAs), and flexible spending accounts (FSAs).
  3. Research financial advisors. As we say at The Humphreys Group, it’s not just about the numbers. Find a financial advisor who you feel comfortable with and can connect with.
  4. Attend a Conversation Circle. The Humphreys Group regularly hosts Conversation Circles where we have authentic conversations about money. Let us know if you’d like to join us at our next one!
  5. Talk about money with your family and friends. We as a society are conditioned to not talk about money. But money affects everything in our lives — why should something so pivotal in our lives be taboo to talk about? Have an honest conversation with your family and/or friends about money. As CNBC Make It suggests, host an event and 1. invite friends who are comfortable around each other, 2. set expectations ahead of time, 3. have topics ready (but let the conversation flow naturally), 4. ask questions, and 5. be open to new perspectives.

Continue the Conversation About Financial Literacy with The Humphreys Group

The Humphreys Group is passionate about empowering women in their finances and giving them the tools and resources they need to succeed. If you’d like to continue the conversation about financial education, reach out to our team today.

The Importance of Impact Investing

Published in: Resources |

The global COVID-19 crisis, social unrest, and economic inequality have highlighted how connected we all are and how deeply we need more efficient systems.

This is where impact investing — also known as SRI (socially responsible investing), ESG (environmental, social, governance), sustainable investing, or socially screened investing — comes in. While impact investing is not new, investors are now starting to fully understand its significance. Investors want to make a difference in the world with the capital they are investing.

Impact Investing By the Numbers

Supporting a sustainable future is not only good for the world — it’s good for your wallet. There’s a common perception that by investing in sustainable companies, you pay a price for more “moral” investments — but data suggests that sustainable investments are actually financially rewarding. Here are a few key stats:

  • The COVID-19 pandemic crashed the market, yet sustainable investments performed better than their counterparts during the first quarter of 2020. According to BlackRock, investment funds tracking the performance of companies with better ratings on ESG issues lost less money than those including worse performers in 94 percent of cases during the COVID-19 crisis.
  • Last year, shares of the 100 companies on Barron’s America’s Most Sustainable Companies” list had average returns of 34.3 percent, while the S&P 500 had 31.5 percent.
  • 2019 saw a total of 479 green bonds issued worldwide, up by a quarter compared to the previous year. 2020 is set to be a “bumper” year for green bonds.
  • According to Global Impact Investing Network (GIIN)’s 2020 Annual Impact Investor Survey, the global impact investing market is estimated at $715 billion.
  • For the past one-, three-, and five-year periods, ESG stock and allocation fund strategies lost less money than non-ESG funds during market declines and displayed less volatility, Morningstar reports.
  • According to a Nuveen study of high-net-worth investors and financial advisors, 54 percent said they would invest their entire retirement balance into a responsible investment portfolio.

But the push for impact investing is not just about potential returns: As The Business Times notes, people worldwide want companies to reduce their impact and are becoming more aware of the role that financial institutions play when it comes to creating a sustainable future.

For instance, the movements Fridays for Future and Extinction Rebellion demand action from political and business leaders. And as Barron’s writes, “How a company treats essential workers has become a measure of how responsible it is. … Then came the deaths of Ahmaud Arbery, Breonna Taylor, and George Floyd, and the widespread protests about police brutality and inequitable treatment of people of color. Top-level executives, who once took a hands-off approach to such issues, began speaking out.”

Employees also want to work for businesses that put sustainability as one of its core values. As we’re seeing, impact investing is not just a fad — it’s an investment strategy that is here to stay for the long-term.

Interested in Impact Investing? Reach Out to The Humphreys Group Team Today

The Humphreys Group supports the increased interest in investing to promote social good. It’s one of the most effective ways we can vote with our dollars. Many of our clients are invested in ESG funds, such as the Pax Ellevate Global Women’s Leadership Fund, the Pax Global Environmental Markets Fund, Dimensional Fund Advisors’ Social Investment Funds, and Dimensional Fund Advisors’ Sustainability Funds. If you’re interested in learning more about impact investing, reach out to our team today for additional fact sheets and materials.

The Idea that Women Need “Extra Help” Understanding Their Finances is a Myth

Published in: Resources |

For 20 years, Annamaria Lusardi, an Italian-born economist and researcher, has been testing people all over the world on their financial knowledge. She has become especially well-known for constructing a financial literacy test composed of three basic questions on inflation, diversification, and compound interest. Unfortunately, only about 30 percent of Americans could answer all of them correctly. Even more alarming, however, is a sizeable gender gap: While 38 percent of men provided the correct answer to all three questions, only 22 percent of women did the same.

Research like this has fueled a newfound crusade within the financial services industry to educate women on their finances. While we submit that the gender gap in financial literacy exists, let us be clear: The idea that women need extra help understanding their finances is a myth.

A key reason why women performed worse than men on Lusardi’s financial literacy test? They disproportionately answered the test questions with “do not know.” To determine if this was truly the result of a lack of understanding, Lusardi and her research team decided to remove “do not know” as an answer option. When they did, women’s correct responses increased significantly. In fact, Lusardi estimates that half of the gap was the result of women underestimating their own knowledge!

An Unfair Advantage: The Correlation Between Financial Knowledge and Wealth

While this simple change sheds light on how often women underestimate themselves, it did not eliminate the gender gap entirely — which means that yes, men still do appear to have more financial knowledge than women. But it’s not because women are less capable of understanding financial concepts; it’s because they’re rarely given the opportunity to learn about them in the first place.

Across the world, those with the most financial knowledge are also the most wealthy — and it turns out men are significantly wealthier than women.  As a result, a college-educated man is 45 percent more likely to understand diversification than a low-income woman with less than a high school education.  And because financial literacy is a major predictor of behaviors that accumulate money (like investing in the stock market), this lack of knowledge only exacerbates economic disparities.

Where the Financial Services Industry Gets It Wrong

The financial services industry views this disparity as an opportunity to “swoop in and rescue” women from the unfortunate situation in which they find themselves. Advisors cite less financial education, a longer life span, and lower salaries as evidence that women need help understanding and managing their money, and proudly present themselves as the solution. Large firms, eager to build their clientele, now offer internal workshops on how to deliver “female-friendly” financial advice, complete with patronizing sales pitches. And a new flock of financial gurus have now made a living off of selling books that are unhelpful at best, and sexist at worst.

Women Are Taking Initiative and Fixing the Financial Literacy Gap Themselves

Fortunately, women already know they need to learn more about money and are taking it upon themselves to fix it. Financial wellness programs have seen an encouraging uptick in female participants in recent years. In 2014, Financial Finesse found that women completed two-thirds of their financial evaluations, up from one-half three years before.

Many instructors have also observed that women’s willingness to seek out financial education makes them easy to teach compared to men, who are usually less likely to admit what they don’t understand. And we’re already seeing the gap closing across generations: A recent study found that the financial literacy gap between genders for those under age 35 is much smaller than the general population. Women are taking initiative, proving they do not need to be coddled and cajoled into understanding their finances.

Learn More about Money Myths with The Humphrey Group’s eBook

Of course, because this problem is largely rooted in systemic issues, many argue that education alone won’t make the financial literacy gap disappear.

This is certainly true — rather, large-scale economic change would make a huge difference in helping women become more educated about money.

But for now, we can move the needle by focusing on what we can control and take financial literacy into our hands. If you’d like to learn more about common money myths and how we can dispel them, download our free eBook Rewriting the Rules: Telling Truths About Women and Money.

The Truth About Gender Stereotypes and Mathematics

Published in: Resources |

Back in 2005, Larry Summers — then, the president of Harvard University — was asked to speak about the underrepresentation of women in science and engineering. In his remarks, he suggested that women have difficulty finding success in these fields because of innate gender differences in our mathematical abilities — he called it our “intrinsic aptitude.”

This prompted a massive outcry, in and outside the world of academia. Even after issuing an apology, the comments led to his resignation the following year. Summers likely didn’t know it at the time, but he was echoing one of the oldest gender stereotypes in the book.

And although we have decades of research disproving it time and again, one need look no further than James Damore’s 2017 Google memo — which asserts that “women are biologically less capable of engineering” — to confirm the stereotype is still alive and well.

We are officially adding our voices to the chorus: The idea that women are inherently bad at math — and anything it involves — is a myth!

Looking at the Numbers

Of all the myths we’ve chosen to bust, this is probably the one you’re most familiar with. For generations, women have been told they aren’t as skilled at math as their male peers, and as a result, they’ve been steered toward pursuing careers in the humanities rather than science, technology, engineering and finance.

People who echo Summers’ claim say research is on their side, but since the 1980s, a litany of studies have thoroughly debunked this notion. One well-known meta-analysis found that female students have consistently earned slightly higher grades than their male counterparts in all fields of study since 1914.

Yes, you read that correctly — for more than a century! And when you look at a combined high school grade point average for math and science specifically, girls have been outperforming boys for at least 25 years.

Although the gender differences are generally small, one team of researchers stated the sheer consistency of female achievement suggests their findings “should not be ignored.”

To be clear, although we earn better grades, boys still do receive higher math scores on standardized tests like the SAT, ACT and advanced placement exams. But the gap has grown smaller over time — in the early 1980s, there were 13 boys for every girl who scored above 700 on the SAT math exam. That ratio has now shrunk to about three to one. Clearly, it won’t be long before this gap is closed entirely.

When We Reinforce Gender Stereotypes, Everyone Loses

The bad news is that despite their impressive gains in test scores, girls are still internalizing the message that they aren’t as smart as the boys around them. Researchers at Dartmouth College and Northwestern University found that reminding women of gender stereotypes before an exam not only heightened their anxiety but also caused them to underutilize the regions of the brain associated with mathematical learning.

Even the mere acknowledgement of gender can hamper girls’ achievement — when female students were asked to identify their gender before taking an AP calculus exam, they performed worse than the female students who were asked to identify it after the exam. This little box is estimated to keep nearly 5,000 female students a year from earning advanced calculus credit!

Unfortunately, the consequences of these stereotypes endure long into adulthood. When those female students become adults and start to face questions about personal finance and investing, they often assume those topics require high-level mathematical expertise and doubt their ability to handle it. A 2016 survey found that when tested on financial literacy and diversification, women were much more likely than men to choose the answer “do not know.” But when researchers removed this option as a potential answer, the chances of women choosing the correct response increased significantly.

So, how do we make sure this myth stays in the past, where it belongs?

In Our Experience

Mathematical expertise is not an innate characteristic; it’s a skill set that improves with effort and practice. Even if you still have nightmares about your high school algebra class, you are capable of learning about the fundamentals of investing.

That said, you don’t have to know it all. The financial media is full of superfluous terminology and analysis, which can give a lot of women the false impression that they’re too dimwitted to understand the field. In truth, there are only a few key principles you need to understand to be a good investor.

On a personal note, Diane Bourdo, president of The Humphreys Group, was an English major as an undergrad and refined the art of avoiding math and science during her tenure at the University of Wisconsin. Fast forward to a few years later, and she discovered the absolute joy and certainty of calculus! The precision of math came as a relief after so many years of free-form essay exams.

Want to learn more about money myths? Download our free eBook Rewriting the Rules: Telling Truths About Women and Money and/or reach out to us today.

Rewriting the Rules: Dispelling the Myths Around Women and Investing

Published in: Resources |

When a Washington, D.C-based nonprofit held a series of investment seminars for women nurses at a local hospital, only one or two nurses showed up. But when the nonprofit team changed the names of the seminars, emphasizing the words “financial security” instead of “investing,” suddenly the room filled up with attendees.

This story highlights that women are interested in investing. They just see the concept in a different light or associate it with a different name.

That’s right: The idea that women aren’t interested in investing is a myth.

The Investing Industry Was Created “By Men, For Men”

Sallie Krawcheck, Wall Street veteran and CEO of Ellevest, likes to say that the investing industry was created “by men, for men,” and therefore defaulted to their preferences and characteristics. She points out how the industry places special importance on trading to beat a market index, rather than doing so to accomplish a specific goal, and is overrun by the financial media, which closely resembles sports networks.

Until recently, most firms seemed to focus primarily on male clientele and often relied on financial jargon that men seem to have a higher tolerance for. And then there’s the industry symbol of a bull — a figure that is literally masculine by definition.

Given all this, it makes sense that women haven’t been particularly enthralled with what most investment firms are offering.

Other Industries Have Also Historically Omitted the Female Perspective

The investment world isn’t the only industry that’s designed this way, of course. Design, business, media and technology have also historically omitted the female perspective. Some female entrepreneurs argue that as a result, men move through the world unaware that it’s been designed for their comfort, while women move through the world encountering small, daily points of friction or discomfort. The pain points they encounter in the investment world are especially detrimental, however, because their financial wellbeing impacts their livelihood.

Fortunately, now that women’s economic influence is growing, it appears investing is the next hurdle they are ready to jump. In 2015, Merrill Lynch found that just over 50 percent of women said they wanted to participate in making changes to their investment approach — nearly mirroring the 55 percent of men who said the same.

And when Fidelity asked what women would most like to learn with 60 minutes of professional financial advice, the first choice listed by women in every age group was “learning more about how to invest my money.” It’s clear that women are more ready than ever to carve out their place in the world of investing.

Like the nurses who attended the educational workshops referenced earlier, we’ve also found that women become especially engaged in financial planning when they realize investments can serve as a vehicle to care for their families, reflect their values and give them peace of mind.

Call it what you will — investing, financial security, asset management — but when women make this connection, chances are they’ll enjoy it more than they ever expected.

Keep The Conversation Going About Money Myths

If you’d like to learn more about money myths and how we can rewrite the rules, download our free eBook Rewriting the Rules: Telling Truths About Women and Money. Also consider attending one of our Conversation Circles, where we have authentic discussions about money and everything that comes with it — our fears, our successes, our memories, and the attitudes, behaviors and legacies we’ve adopted over the years.

Women Do Have Financial Confidence, Despite What the Stereotypes Say

Published in: Resources |

In the world of finance, women have long been depicted as indecisive investors, insecure about their financial knowledge and the decisions they make with money. But this is a myth — women don’t lack financial confidence. Here’s why.

Why the Myth Exists

We live in a culture that applauds people who speak and act authoritatively, don’t hesitate or mince words, and make decisions quickly (for better or worse).

While there are certainly women who embody these characteristics, there are many more who tend to think things through before they contribute to a conversation or prefer to gather more information before making a decision. This quality can be easily misinterpreted as a mark of indecisiveness and insecurity when, in fact, the woman who embodies it is simply taking time to reach a well-informed decision.

Research has shown that when complex situations present themselves, women are more likely to evaluate the nuances in the details, while men tend to focus on fewer pieces of data. As you can imagine, this often decreases the quality of the man’s decision-making process and boosts the quality of the woman’s.

Get Rid of the Unnecessary Jargon

Merrill Lynch recently pointed out that even among men and women with similar levels of financial knowledge, women are more likely to say they don’t know enough.

Many of our clients have walked into our office believing they were not adept at handling their finances when, in actuality, they just needed to have their questions answered in a straightforward and transparent way.

More Women Are Taking Charge in Money Matters

The good news is there are early indications that societal changes are improving women’s “confidence” around money, particularly in the younger generation because they are gaining more access to information.

Women ages 25–34 are more likely than their elders to report they learned about finances from one or both parents (62%, compared to 45% of older women), and over half (51%) say they are very confident in their investing skills.

This final statistic is in stark contrast to their elders: Only 36% of women ages 35–49, 14% of women ages 50-69, and 11% of women ages 70–84 said they feel confident in their investing skills.

So, how can we ride this new wave of financial confidence?

What's Behind the Confidence Gap?

Women are often cast as “timid, indecisive investors” when it comes to personal finance. But this couldn’t be farther from the truth. It’s time we broke these damaging stereotypes — and it’s time to own your financial power. #InvestLikeaWoman

Posted by The Humphreys Group on Tuesday, August 27, 2019

In Our Experience

Women often discount their financial savviness without considering areas of their lives in which they are already smart about money — family budgeting, volunteer work involving financial management, managing medical issues, and advocating for family members and loved ones.

Women are adept at picking up financial concepts if they are explained without unnecessary jargon or obscure concepts.

And if women are clear about their goals and values, they’ll find making decisions can be simple and straightforward. Once our clients have defined what matters most, decisions fall into place more easily. Aligning our financial resources with our highest priorities and values can provide relief and a sense of certainty.

Keep the Conversation Going at One of Our Circles

We regularly host Conversation Circles for women who are interested in straightforward and authentic discussions focusing on the non-numerical aspects of personal finance. Everyone is welcome — let us know if you’d like to be included in our next Circle!

Rewriting The Rules: Women Are Not Risk Averse. They’re Risk Aware.

Published in: Resources |

Think women are more risk averse than men? Consider this myth busted. Eighty-five percent of women believe that risk-taking is beneficial when investing.

In 2015, Merrill Lynch asked 5,000 women about their investing beliefs and behavior. When asked if they believed risk was worth the chance of reaping higher returns, the answer was a resounding “yes” — 85 percent said they agreed that risk-taking is beneficial, and 81 percent said they could adapt to changing markets and investment outcomes. The study also found that men and women who share the same level of financial knowledge exhibit the same risk behavior.

Even more interesting is a 2012 meta-analysis of over 25 economic studies regarding risk tolerance differences between men and women. The researchers found that the difference between genders was negligible and even concluded this perception of women as cautious investors “appears to perhaps be rooted more in confirmation bias than in reality.”

In other words, our assumption that women are risk averse may be skewing our perception of what is really going on.

Are Women More Risk-Averse Than Men?

Think women are more risk-averse than men? Tell that to the 85% of women who believe that risk-taking is beneficial when investing. #rewritingtherules #investlikeawoman

Posted by The Humphreys Group on Monday, July 29, 2019

Women Aren’t Risk Averse — They’re Risk Aware

All of these findings would seem to imply women have a healthy appetite for investment risk — and a lot of the time, that’s true. But unlike men, women are more mindful about what the dangers are before diving in. We take the time to evaluate whether the reward justifies the risk.

Sallie Krawcheck, former Wall Street executive and co-founder and CEO of Ellevest, explains this by differentiating between “risk aversion” and “risk awareness.” It’s true that women are often more aware of risk. We are more likely to be invested in an age-based allocation that diversifies across asset classes, for example, and are less likely to be fully invested in equities than men.

Fortunately, these behaviors clearly put women at an advantage: We’re prioritizing diversification over trendy or unsustainable investments, which is a successful long-term strategy.

Our Risk Tolerance Increases as Our Income Increases — But This Is Not a Luxury Many Have

There’s a bigger story happening here: As our incomes increase, so does our tolerance for risk. Fifty-four percent of women who earn more than $200,000 are willing to take “a significant investment risk” to earn higher returns, compared to 32 percent of the broader population of investors. High-earning women are also more likely than low-earning women to own more volatile investments like commodities, hedge funds, and venture capital. This makes sense, considering those with higher incomes have more resources and the higher margin of error that often comes with them.

Unfortunately, most women do not earn six-figure incomes, and further still, most of us are undercompensated relative to our male peers. Therein lies the best explanation for our risk-averse reputation: When we start off with less, we won’t allow ourselves to jeopardize what we’ve already saved — we have less risk “capacity.”

The issue is not that women are wary of taking on risk; it’s that they don’t have as much to risk in the first place. Men, on the other hand, have reported taking on financial risk because they — quite correctly — feel they could easily make up for investment losses with their earnings. This is not a luxury that most women have.

Our Advice to You

The trade-off between risk and reward is the holy grail of investing. Spend some time educating yourself about how diversification works and how investments react differently to economic, market and geopolitical news. There’s no need to read The Economist cover to cover, but you may want to start with a classic piece of investment literature, such as A Random Walk Down Wall Street by Burton Malkiel.

Consider that risk and reward go hand in hand. Work with an advisor, like the advisors at The Humphreys Group, to develop a clear sense of the level of investment risk needed to accomplish your goals. If that level is too high for your risk tolerance, you may need to refine your goals or make other changes.

And don’t apologize if you have a low tolerance for risk. We all have different prerequisites for sleeping well at night. Taking on too much risk can backfire if you make a rash investment decision in a moment of panic or stress.

We invite you to help us change the conversation around women investors and money. If you want read more about common money myths and how we can break them, download our free eBook, “Rewriting the Rules: Telling Truths About Women and Money.”

Being Resilient During Turbulent Times in Your Life — and in the Markets

Published in: Resources |

Between the coronavirus, the stories emerging from the #MeToo movement, and the extreme market volatility we’ve seen in recent weeks, it’s hard to stay afloat. It takes resilience, and fortunately women are good at it. 

What Do We Mean When We Talk About Resilience? 

We’re talking about how we respond to or manage change. We can think of our response to change in phases:

  • Realization: We see the change coming (or we don’t). We may have a long time, or a very short time to prepare. In this phase, we might be resisting or reacting — or be in complete denial.
  • Change happens: It can be abrupt, or there can be continuous change over a length of time.
  • Recovery: The worst may be over, but we find ourselves in a new place (physically or metaphorically). At this point, we are taking stock and figuring out what to do next.
  • Adapting and embracing change: We learn from the experience and adapt to new circumstances.

The good news is that women are good at resilience — some say we learn it from an early age.

Why Women Are Good at Being Resilient

Women learn how to be resilient at a young age because they have to deal with unique stressors — and this continues throughout women’s lives as they carry different burdens and expectations from men. “They carry more of the emotional load in families. The gender biases that exist either beat you down, or you develop a sense of yourself and others as being OK,” says UC Berkeley professor Andy Scharlach

Here are some ways that women are resilient:

1. Preparation

  • They’re good at setting goals and able to see advancement toward a goal in small steps.
  • They’re good at anticipating roadblocks and finding workarounds or recalibrating goals to accommodate new circumstances.
  • They gather information before they take a risk — in investing and other areas in life.
  • In high-intensity athletic events such as marathons, it’s been noted that men have higher drop-out rates than women. One theory regarding why women have better completion rates is that they are more likely to show up prepared in the first place.

2. Endurance

  • Research also shows that women are better at enduring adverse circumstances such as marathons, long-distance swimming, and of course childbirth.
  • The more terrible, cold, wet, and windy the weather, the more women persevere relative to men. In the Boston Marathon, when compared to the sunny marathon the year before, the drop-out rate for men increased by 80 percent, while the drop-out rate for women increased by only 12 percent.

3. Recovery

  • There are a lot of contributors to our higher success rate. One you may not have thought about is that women have a tendency to be collaborative (even in competitive events). Supporting each other and sharing our struggles gives us strength to keep going, and to get back up.

4. Adapting and Embracing Change

  • Women seem to do better at reinventing and retraining themselves. Following the Great Recession, it was found that although women made inroads into traditionally “male” roles, men were much less likely to take on “women’s work.”

All this is to say, we are good at this. In difficult times, it can feel like you’re barely hanging on, but remember that you have the tools to succeed.

Resiliency in Your Financial Life

At The Humphreys Group, we talk a lot about the importance of resilience with our clients — financial resilience, emotional resilience, physical and health resilience, spiritual resilience, community and social resilience, and vocational resilience.

Financial resilience refers to your ability to withstand life events that impact your income and assets. While it’s often not pleasant to think about, developing this resilience before a financial emergency happens can be a huge help to your future self.

If you’d like to talk more about resiliency and how you can further apply it to your financial life, reach out to us today.

IWD 2020’s Theme Is #EachforEqual — It’s Time We Aimed for Gender Equality in Finance

Published in: Resources |

The theme for this year’s International Women’s Day (IWD) on March 8th is #EachforEqual, promoting that “an equal world is an enabled world” and that “collectively, each one of us can help create a gender equal world.”

This theme especially applies to the financial services industry. As InvestmentNews notes, only 14 percent of advisors are female. With 32 percent of all wealth (about $72 trillion) expected to be controlled by women in 2020, it’s time we built a financial services industry that actually reflects the world we live in.

How We Can Achieve Gender Equality in Finance

So, what are some concrete steps we can take to reach gender equality in the finance industry? New research from LeanIn.Org and McKinsey & Co found that helping women move beyond entry-level positions in their financial services careers could be the solution.

Even though women and men enter the financial services workforce in roughly equal numbers, men outnumber women by nearly two to one when it comes to that first step up into manager roles. And that first step is the bridge to more senior leadership roles.

That early drop in the number of women earning promotions creates a gender gap that continues to grow with every step up the career ladder.

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How can we fix this? Firms need to recruit more women financial advisors; mentor women and prepare them for that first level of management; boost the diversity of their leadership development programs; and review their current policies and take steps like conducting a pay equity audit.

If you’d like to continue the conversation about gender equality in finance, consider joining us at one of our Conversation Circles.