Women are often too cautious when it comes to investing, money expert Mary Holm tells Wendyl Nissen, so she hopes her new book will inspire them to be more daring and end up with a bigger bank balance to retire on.
When it comes to money, there are those of us who are great at handling it, others who are terrible and some of us who saved their 50c a week with the ASB when we were children and can manage a mortgage but that’s really about it.
The hard reality is that not many of us received any education about how to make money work for us other than the basic equation of – you earn it, you spend some and you save some.
When it comes to seeking out money advice we tend to think only rich people do that. Who would want to know about my measly salary and my mortgage?
And if you’re a woman, you are extremely unlikely to ask for advice. We tend to be very cautious about money and put all our money in a savings account rather than risk investment.
“It’s a self-preservation instinct,” says money expert Mary Holm.
“Yet there are ways you can invest which are really low risk and you can end up a whole lot better off.”
Readers of the New Zealand Herald will be very familiar with Mary’s personal finance Q&A column in the Weekend Herald, which is a hub of vital information combined with a nice dose of humour. She also appears on RNZ regularly, has written bestselling books on finance, and in the last Queen’s Birthday Honours was appointed an Officer of the New Zealand Order of Merit for her services to financial literacy education.
There’s no one more accessible or easy to understand than Mary when it comes to financial advice. She is keen to point out that she’s legally not allowed to give financial advice, because she’s not an authorised financial adviser, but she is a financial journalist from way back and can be described as New Zealand’s most trusted money expert.
Which is fine by her.
“I like to answer letters to my column and give broad advice because I would hate to advise someone specifically on what to do with their inheritance and have it all go horribly wrong,” she says.
Her latest book, A Richer You: How to make the most of your money, is one she would really like women to read.
“I think it might give women more confidence to be more daring with their money,” says Mary. “I also worry about a lot of women, quite a few who I know, who might be in a great marriage but if the husband dies first, which is very common, the wife is left floundering because she’s never been included in any of the financial decisions.”
Mary says many women, even successful career women, are told that they are “bad with money” by their partners and therefore the man in the relationship should take care of all the finances.
Women are also vulnerable in new relationships where men will insist that the money and real estate they have when they come into the relationship is tied up in a trust for their children, leaving the new partner without anything if he passes away.
“It’s not hard to understand money and investment and you really just need to read up about it, and that’s where my book is so handy. It’s letters I have selected from my column, which cover the basics of managing your money to investments, retirement and helping others with any spare money you might have – for instance, your children.”
There are many letters from women Mary has advised. Probably the loveliest is from a 54-year-old woman who put her money into rental properties and set off to live in a caravan, travelling around New Zealand, doing odd jobs like fruit picking and café work on her way.
“Working out what to do in retirement is a big issue for many of my letter writers,” says Mary.
“A lot of people do manage on just the NZ Super. Forty percent of singles over 65 have virtually no other income than NZ Super, and 60 percent get less than $100 a week from non-government sources.
“But if some planning happens before then, you can have a much nicer retirement that includes travel and lovely times at vineyards and concerts.”
The upside of risk
Mary says cautious women are lucky to have KiwiSaver because it doesn’t expose people to too much risk.
“By now everyone is pretty much in it and you can choose what risk level you want when it comes to investing. One of my driving forces is to help people understand that if they just take a bit of risk, in the long run they will end up with a lot more. Just relax with it, and if the balance goes down a bit when you are in a high-risk fund then just hang in there, it will come right. And in a high-risk fund, in the long run the returns are almost certainly going to be higher, and quite often a lot higher.”
She says last year offered us all a great lesson when, because of Covid-19, the sharemarket suffered, but then recovered remarkably fast.
“I just hate hearing about people who got out when it went down and didn’t stick with it.”
Mary says there is no need to go to a share broker if you want to invest some savings.
“If you’re starting out you’ve got to try and pick which companies are going to do well, and if you’re an amateur you’re not going to be good at that.
“But whoever is managing your KiwiSaver will have lots of different managed funds you can choose from and you automatically get diversification, so if several shares do badly they get balanced out by others.” (See facing page for some websites to visit.)
Mary says really well-off people always take high-risk funds and it works for them, but there is always an element of luck with that type of investment.
“They will tend to say that they were very clever with their investments, but you never hear from the ones who didn’t do well.”
Personally, Mary is not a high-risk investor, despite being a money expert. “I’m comfortably off, largely because I’ve invested in index funds, which are a low-fee fund, since the 1970s when I first started work. They’ve just sat there and grown very nicely, but I’m not that interested in taking high-risk investments.”
Mary’s newspaper column has been running for 23 years and she says it’s the interaction with real people and their different circumstances that keeps her interested.
“One letter can prompt responses and one story can keep going across the column for weeks because other people come in and put their two cents’ worth in. I think these stories are a great way for people to learn, rather than just reading the facts.
“And there are moments of humour, some battles, some of it shocking, and some of it quite useful information!”