Yahoo Finance Just do it: Why Aussie women need to invest
Albert Einstein is said to have described compound interest as the “eighth wonder of the world”.
“He who understands it, earns it; he who doesn’t, pays it.”
But in 2020 that message needs to shift to include women: “She who understands it, earns it.”
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Currently, Australian women retire with around 47 per cent less in their superannuation accounts, while only four-in-10 millennial women feel confident about their financial futures.
And, women are statistically less likely to invest - only 48.1 per cent of women hold savings or investment products outside of super, compared to 55 per cent of men.
But for exchange-traded fund (ETF) provider BetaShares CEO Alex Vynokur, the solution is relatively simple: just do it.
“We need to… really debunk the myth that investing has to be complicated and that investing requires a huge amount of money basically to get started,” he told Yahoo Finance.
“I think the most important thing is to realise that anytime is really a good time to get in. The most important thing is to get started.”
Wait - what’s an ETF?
ETFs are investment funds which are bought and sold on an exchange and generally track the value of an index or a particular commodity, like gold. They’re considered a low-cost way to enter the market, with some firms like BetaShares offering entry for $50.
And they’re growing increasingly popular among female investors.
Investment Trends research conducted in 2019 found women now make up 24 per cent of new ETF investors, compared to only 11 per cent five years ago.
“It's a very, very, obviously encouraging statistic from our perspective,” Vynokur said.
However, there’s still major work to be done to improve financial literacy, and the BetaShares CEO believes the education system also needs to lift its act.
“It's definitely not good enough what's going on in schools. I think we learn the basics of mathematics, history, and geography, et cetera at school [but] I think the basics of financial literacy actually, as we know, are not taught,” he said.
“We actually need to get smarter as a nation. Girls need to get smarter. Boys need to get smarter. They need to learn the basics of financial literacy around budgeting, around investments, around this magic of compounding.”
A growing urgency
Australia has around $7 trillion tied up in the property market, and women prefer to invest in property: 60 per cent of women own or are buying a home, compared to 56 per cent of men.
But while homeowners are enjoying rocketing value growth, the reality is that for many, the market is growing increasingly unaffordable.
All five major housing markets in Australia have been deemed “severely unaffordable” in a recent international ranking, with Sydney holding onto that title despite shedding $100,000 in the year to June 2019.
And as that affordability challenge surges again, Vynokur believes Australia’s love affair with property needs to be challenged.
“The traditional path to building wealth in Australia has really resided around this concept of property ownership,” he said.
“We have all grown up knowing that you have to work hard, try to save some money, try to save for a deposit, and then once you have saved for a deposit, you can buy a place and that's really going to be the source of wealth accumulation for long term.”
Four-in-five Australians still consider homeownership important, but nearly half of all potential buyers are having trouble getting a loan, recent CoreLogic research found.
To Vynokur, the challenges mean Australians need to pivot.
“That [property] door is actually closed to so many people,” he said.
“It's an educational job, but I think the ... role for the industry overall to continue lowering the barriers basically,” he continued, noting how many investment funds still require investors enter the market with a minimum sum of hundreds-of-thousands to millions of dollars.
“But if I look at the decade ahead of us, I've got absolutely no doubt that the numbers of males and females will continue equalising and we've just got an educational job to do.”
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