Tag: rewriting the rules

Rewriting the Rules: Building a New Blueprint in 2021

Published in: Resources |

In our eBook, Rewriting the Rules: Telling Truths About Women and Money, our research helped us distinguish myth from reality when it comes to women, money, and personal finance. Here were some of our key findings:

1. When it comes to investing, women gain a performance edge thanks to their patience, low-trading frequency, and goal-driven strategies.

2. Our money and our emotions are inextricably intertwined. The more we recognize and embrace this, the more our “elephants” (intrinsic motivations) can inspire our “riders” (rational actions), and the more we can harness our emotions for positive change.

3. Women aren’t afraid of risk — but their heightened risk awareness leads them to allocate their risk-budget prudently.

4. Women make financial decisions in a measured and patient way.

5.  Women learn best in group settings and are eager to benefit from the wisdom of their peers.

6. For women, investing is less about bragging rights than it is about accomplishing goals and reaching life’s milestones.

7. Keep it simple, sister — women aren’t seduced by unnecessary complexity.

8. Women are more engaged in financial wellness programs that are well-paced, relevant to their daily lives, and presented in clear terms.

Today’s financial institutions were built by and for men, so it’s no surprise that the “norm” does little to reflect the strengths and preferences of women, as described above. What would happen if we flipped the narrative? What if we redesigned the world of personal finance, using the strengths and preferences of women as our starting points?  Until very recently, the industry has kept women away from the table. Now that we have a seat, we don’t necessarily have to do things the way men have all these years.

Our ability to listen — truly listen — and engage in meaningful conversation is key. So far, women have been asked to reject or mask their femininity in the workplace, in the business world, and in financial conversations. Instead, let’s value our insights, derived from our lived experiences, to develop viable business models that can benefit us all.

In a capitalist society, money is power — there’s no getting around that. We deny it to our own detriment. How do we want to wield our financial power? To quote one of our heroes, Sallie Krawcheck, founder and CEO of Ellevest and veteran of Wall Street:

“Financial feminism is about women doing four very important things with money: earning it, making more of it, saving and investing more of it, and using it to make our world better. And it’s not just good for us — the more opportunities women have, the better off society is.”

What she said!

We will do ourselves a disservice if we avoid getting smart about, recognizing, embracing, or talking about money and how it shapes our lives. Instead, women can recognize and embrace their leadership roles, within their family or on a team at work. In many aspects of our lives — including the financial ones — we can operate in ways that are similar and dissimilar to men. What starts out feeling uncomfortable becomes easier and less fraught over time. While we build skills and confidence, step-by-step, we can lean on each other, collaborate, share wisdom, and ask for help — but the point is to start.

You can download our eBook, Rewriting the Rules: Telling Truths About Women and Money, here.

Explaining the Wealth Gap

Published in: Resources |

Despite a fair amount of progress, women still only earn about 79 cents for every dollar a man makes. Countless advocates have dedicated their time to push for policies intended to close the gender income gap, and it’s still worth fighting for — researchers say the gap likely won’t close until at least 2059.

But the income gap is not the only thing hampering women’s financial mobility. Lurking beneath it is another disparity that, in some ways, is even more alarming: the wealth gap.

We think tackling gender differences in wealth is just as important as tackling gender differences in pay, so we’re taking the first step in doing just that. Allow us to explain why it’s a myth to think that closing the income gap is all women need to achieve economic equality.

What is the Wealth Gap?

Okay, so the wealth gap exists, but what exactly are we talking about? The most recent data comes from the Federal Reserve, which revealed that in the United States, the median wealth for single women is $3,210, while single men have a median wealth of $10,150. This means women own 32 cents for every one dollar owned by men. That’s it — 32 cents. And just like the wage gap, the wealth gap is even worse for women of color. Black and Latina women own just pennies on the dollar compared to their white female peers.

This is important because, at the risk of stating the obvious, a person’s wealth — their assets (cash, investments, and real estate) minus their liabilities (credit card debt, student loans, and mortgage debt) — determines how well they withstand a financial emergency.

In fact, many economists believe that measuring wealth is a much more accurate picture of how one is doing financially because wages only indicate how much money is coming in; wealth measures how much has stayed in. When an unexpected medical bill or car repair arises, it’s wealth that we tap into — and men are able to tap into literally three times as much.

Why is the Disparity So High?

There’s no doubt that the income gap contributes to this difference in wealth, but it is not the sole reason the disparity is so high. Another significant element is single parenthood. Women are more likely to shoulder the responsibility of raising children on their own. If you have kids, you know parenthood does not come cheap. Between 2000 and 2012, child care costs increased by 24 percent and medical care costs increased by 21 percent. This happened during a time when the median income in the United States actually declined.

As a result of rising costs and lower incomes, women — particularly low-income women — are increasingly likely to take on debt to cover their expenses. JP Morgan Chase compared the accounts of men and women following a large, unexpected medical payment and found that one year after the payment was due, women experienced a 14 percent increase in their revolving credit card balance, while men experienced an increase of just 3 percent. And that was just a credit card — when looking at women’s liabilities overall, their median debt was 177 percent higher than the median debt for men. Mariko Chang, a leading researcher on the wealth gap, calls this the “debt anchor” because debt payments so clearly weigh down a person’s ability to build a financial safety net.

Lastly, the wealth gap is further exacerbated by the limited access women may have to employment benefits, government benefits, and tax breaks that facilitate wealth-building, due to their employment status.

Women are more likely to work part-time jobs, which often inhibit them from participating in 401(k) plans and accessing health insurance. In addition, women are incredibly underrepresented among the wealthiest Americans, who receive the most generous tax credits, deductions, and exemptions. The top 1 percent receive $95 billion in federal tax benefits, which is more than 26 times the bottom 20 percent, who receive $3.6 billion — and women are overrepresented in that bottom 20 percent.

What Can We Do to Fix The Wealth Gap?

It’s easy to get discouraged by all of this evidence. We understand that creating positive change may seem daunting, as the causes for the wealth gap are systemic, societal, and largely beyond our control.

There actions we can take that will help alleviate the wealth gap and give it the attention it deserves.

Check out the Consumer Financial Protection Bureau (CFPB). The CFPB is a government agency that makes sure American banks, lenders, and other financial companies treat their customers fairly. The CFPB website offers a wealth of resources and information, including guides on securing different types of loans, understanding the ins and outs of student loans, and detecting financial frauds and scams.

If this strikes a chord and aligns with your values, consider supporting a community loan or nonprofit organization that is tackling the wealth gap, such as the Northern California Community Loan Fund. This organization (and others like it) provides financial products, sound advice, and community involvement to create economic opportunities and revitalize low-income communities. 

Support your local female entrepreneurs. Use their services, buy their goods, and frequent their enterprises. In the big picture, this may seem insignificant, but it makes a world of difference to that business owner. Building a business is one of the quickest ways people accumulate wealth, and your financial support — at any dollar amount — will play a part in that.

See Robert Reich and a colleague walk through “the why’s” of the wealth gap, and explore what can be done on a policy level to reduce it. Watch the four-minute video here.

Want to learn more about the wealth gap and breaking money myths? Download our free eBook Rewriting the Rules: Telling Truths About Women and Money.

Dispelling the Myth of the Female Shopaholic

Published in: Resources |

Women have had to deal with the “overindulgent spendthrift” stereotype for ages, and it has led mostly advisors to accept what financial journalist Helaine Olen calls the “Sex and the City approach to female finance.”

The underlying message? Those silly girls run into financial trouble because they buy Jimmy Choo shoes when they should be giving money to Chuck Schwab instead.

But the idea that women spend their money irresponsibly is a myth.

Where the “Shopaholic” Myth Comes From

Why do women have such a notorious reputation for being shopaholics? It’s likely because women do tend to shop more than men — in fact, they’re responsible for 85 percent of overall consumer spending.

But consider the context: Women are almost always the primary caregivers for their loved ones. That means they end up not just buying for themselves but for their kids, spouses, relatives, friends, colleagues, neighbors, mailman, babysitter… you get the picture.

“If somebody, somewhere needs a gift, chances are there’s a woman thinking about it — tracking it down, wrapping it, making sure it’s accompanied by a personal message, and then delivered on the appointed day,” says Bridget Brennan, a leading researcher on female consumers. “I sometimes think entire industries would collapse overnight if women stopped being so thoughtful. Consider the impact to the greeting card industry alone.”

Looking at the Numbers

When women do shop for themselves, they spend more on categories you’d expect, specifically clothing and personal care. Men, on the other hand, splurge more on alcohol, electronics, and car purchases.

In fact, men spend more overall:

Yet somehow, men don’t seem to encounter much criticism about their spending habits — no smirks, no snide comments, no finger-wagging, no latte-shaming.

Own Your Financial Power 

Own Your Financial Power

Society has smugly dismissed women as overindulgent spendthrifts for ages, and it has led most advisors to accept what financial journalist Helaine Olen calls the “Sex and the City approach to female finance.” The underlying message? Those silly girls run into financial trouble because they buy Jimmy Choo shoes when they should be giving money to Charles Schwab instead.We’re sorry we even have to address this stereotype, but it’s so pervasive we’d be remiss not to: The idea that women spend their money irresponsibly is a myth. It's time we got rid of this false narrative. #InvestLikeAWoman #RewritingTheRules

Posted by The Humphreys Group on Thursday, December 5, 2019


It’s time we changed the narrative. Don’t be afraid to share the data and your own experience with others. And if you want to learn more about dispelling common money myths, download our free eBook Rewriting the Rules: Telling Truths About Women and Money.

If you’re interested in learning more about impact investing, reach out to our team today.

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.”

Rewriting the Rules: Emotions Should Play a Role in Money Matters

Published in: Resources |

Most financial advisors say that you should keep emotions and investing separate:

“Emotions cloud your judgment.”

“Emotions have no place among the pie charts and annualized returns reflected in your financial plan.”

“It’s best to compartmentalize your feelings and save them for your therapy appointments.”

But we’re here to say that this is a myth, and that emotions SHOULD play a role in money matters.

Where the Myth Comes From

This myth is partially derived from the conventional wisdom that thinking and feeling are two separate processes guided by different regions of the brain.

But modern neuroscience research has shown that those areas of our brains are actually highly interconnected by neurons that translate both cognitive and emotional messages.

For this reason, it’s nearly impossible to completely disentangle our thoughts and feelings. One pair of researchers highlighted a common experience that emphasizes this point: You may justify a car purchase by claiming you got a good deal, but the true determining factor may have been that you liked how the car made you feel.

Does That Mean We Endorse Making Panicked Decisions Every Time The Market Swings? Of Course Not.

Even when the market has our stomachs in knots, we provide much-needed objective reasoning to our clients. In fact, regardless of the market environment, nearly every big choice in our clients’ lives involves plenty of dialogue, analysis and projections to estimate how it would affect their future.

But both intuition and emotion play important roles in this process. A person’s history, their current situation, and their future ambitions influence every money decision they make; disregarding this is doing a disservice to their lived experience.

Rewrite the Rules with The Humphreys Group

Investments are so much more than just figures and statistics. They represent our security, independence, values and legacy. Some clients may view their investments as validation that they worked hard in life; others use them to support causes they believe in and give back to their communities. Some investors see their investments purely as assurance that their loved ones will remember them and live well after they’re gone.

While most advisors would prefer to focus on the analytics of the investments, it takes a special advisor to acknowledge the values behind the numbers.

We must talk more about our feelings in the context of money. We have seen that embracing our emotional side and having those pivotal conversations can lead to better financial outcomes. 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.”

Women, Men and Investing: We Debunk the Myths

Published in: Resources |

There’s a myth that has permeated the financial services industry for decades: that men are better investors than women. But it turns out that assumption is simply not the case.

According to a 2016 Fidelity study, female investors tend to outperform male investors by an annual average of 0.4%. This doesn’t seem like much, but it accumulates to a significant financial difference over time.

For example, let’s say a man and a woman each invest $100,000. Assuming a 4.6% average annual return for the man and a 5.0% average annual return for the woman, her investment will have grown to $432,200 after 30 years, while his will be valued at only $385,400. That’s nearly a $50,000 difference and is half of the original investment!

Why Are Women More Natural Long-Term Investors?

First, men tend to buy and sell their investments more often. The same Fidelity study found that men made an average of 55% more trades in 2016 than their female counterparts. This can be financially injurious because the more an investor trades, the more he risks making an investment right before it decreases in value or selling the investment right before it gains momentum. Because women are more likely to hold on to their investments throughout market fluctuations, they capture more growth over time.

Digging deeper, why do women hold on to their investments longer? There are a lot of reasons. As women, we usually conduct more research before investing and maintain a long-term perspective more often. We tend to view investing less as a game to be won and more as a means to accomplish our goals. Regardless of the psychology, women’s success in the investment world is good news.

Rewrite the Rules with The Humphreys Group

The media portrays investors as men in suits walking down Wall Street. But the data tells a different story. Let’s keep breaking the money stereotypes that have held women back for way too long. Read more about common money myths in our free eBook, “Rewriting the Rules: Telling Truths About Women and Money.”