Many women still perceive investing as complicated or intimidating. Or they believe a person needs a big lump sum in hand before being able to start exploring the market. These are incorrect assumptions, says Adèle Hattingh, the JSE’s Specialist Securities Manager. ‘ETFs [exchange traded funds], for example, are easily accessible, diversified, low cost and transparent listed investments to build long-term wealth. They offer investors exposure to a wide variety of asset classes, local or offshore, different geographies, sectors or investment strategies in often small denominations. ETFs are not only a valuable investment tool for the seasoned investor, but also for the beginner investor. They can often also be the start of parents’ investment portfolios for their kids.’

She says one of the greatest advantages of ETFs is instant diversification. ‘Diversification is valuable to all investors as it can help to reduce the risk of concentrating investments in a single asset, sector or market. If one had to assume that women were, generally speaking, more risk averse and were needing steady returns, ETFs could enable these risk-averse investors to create a balanced investment portfolio that could, as an example, consist of a varied proportion of equity ETFs and bond ETFs. This would allow investors to have some higher-risk assets (equity ETFs) and some lower-risk assets (bond ETFs) that could complement each other; for example, bond ETFs can offer stable returns when equity ETFs are particularly volatile.’

The low-cost, accessible and transparent nature of ETFs means investing can transcend beyond the individual, extending to families and communities, says Hattingh. ‘Financial education and empowering investors with correct information that is easily consumed and understood and which can be imparted to others is a powerful advantage.’

Cost is often a major consideration for first-time investors, so the relatively low costs associated with many ETFs help women (and men) maximise their investment returns over the long term. ‘Because ETFs are generally low-cost investment vehicles and often easily accessible on stockbrokers’ platforms, investment apps or other online platforms, they allow investors to contribute either scheduled monthly investments via a debit order or once-off investment contributions. This disciplined approach can help investors benefit from the power of compounding and reduce the temptation to time the market and make knee-jerk reactions when the market is volatile.’

Hattingh says women investors can also look at structured financial products on the stock exchange. These are pre-packaged investment strategies that combine traditional assets with derivatives to achieve specific risk-return objectives. ‘Structured products, though typically for the slightly more sophisticated investor and those with more disposable income on hand, can offer alternative exposure compared to what traditional ETFs and other investments might typically provide. Their strategies can aid in protecting capital or offering enhanced yield and can therefore help create a portfolio that might be geared towards wealth creation or more long-term investment goals like retirement. Structured products can also aid in supporting important financial goals at different milestones or life stages. Structured products, depending on their investment outcomes, can often be tailored to align with an investor’s specific goals or risk appetites. Features like capital protection or yield enhancement or income generating can help investors construct a portfolio that meets those needs.’

No matter what product investors choose, Hattingh says it’s vital that they understand that starting early with a regular, even small, amount is often more important than waiting to start with a large investment.

‘If investors consider that the objective should be for long-term retirement or wealth creation purposes, it becomes more crucial to spend as much time in the market as possible rather than waiting for the ‘right time’ to invest. Starting early and benefiting from the power of compounding offers great benefits over time.’

By Mark van Dijk
Image: iStock