What Every Woman Should Know About Investing

1. What Every
Woman
Should Know
about
Investing
Facing Unique Financial Challenges
Building on Unique Advantages
Taking Action for Financial Success
| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Today, we're going to talk about investing in a presentation that was
especially designed for you as a woman. In the next 15 minutes we will
discuss:
• The unique challenges women face with their money and investments
• The unique advantages women enjoy when it comes to money and
investing
• And how you can take action that can help you secure your financial
future.
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2. Common Goals,
Unique Challeng es
Common
Goals,
Unique
Challenges
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Women and men share the same financial goals. But they face different
financial challenges. Research shows that the genders also tend to
approach investing in different ways. That’s why we tailored this
presentation just for women.
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3. Facing unique financial challenges
lower % of what men receive
Time Out
of the pension
Workforce Social
Security
Results in:
income
Sour ce: Social Secur ity Administr ation, 2004;
U.S. Depar tment of Labor ; Institute for Women’s
Policy Resear ch, 2005.
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Women face some unique financial challenges, especially when it
comes to their working lives. The average woman spends 15% of her
career years out of the paid workforce, which translates into:
• Lower pension coverage—women receive only about 1/2 of what men
receive in pension income and about 2/3 of what men receive from
Social Security.
• Lower income—women earn only 76 cents for every dollar earned by a
man.
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4. Facing unique financial challenges
Living Longer, More Savings Needed
50% chance of living to 25% chance of living to
male 85 92
age 65
50% chance of living to 25% chance of living to
female
88 94
age 65
at least one person has
at least one person has a 50% chance of living to a 25% chance of living to
couples 92 97
age 65
Sour ce: Annuity 2000 Mor tality Table, Society of Actuar ies. Figur es assume you ar e in good health.
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The average woman is likely to need to save more money for retirement
because she can expect to live longer than the average man.
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5. Facing unique financial challenges
Nine Out of Ten Women Will Be Solely
Responsible for Their Own Finances
Sour ces: National Center for Women and Retir ement Resear ch; U.S. Bur eau of the Census, 2005.
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Women are more likely than men to live alone in retirement.
• The average age of widowhood is 56.
• The divorce rate for first marriages is 50%, for second marriages it is
60%.
• At some point in their lives, nine out of 10 women will be solely
responsible for their own finances.
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6. Facing unique financial challenges
Greater Healthcare costs and healthcare spending are
rising faster than the annual rate of inflation
Health
Care
8.2%
4.3%
Needs 2.8%
annual healthcare healthcare
inflation inflation spending
Sour ce: U.S. Bur eau of Labor Statistics, 2005.
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A woman’s healthcare needs are likely to be greater than a man’s since
women live longer. With healthcare costs rising faster than the annual
rate of inflation—and healthcare spending rising even faster—it puts an
additional strain on a woman’s retirement savings.
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7. Facing unique financial challenges
knowledgeable about women men
Women
investing
Trail Men
on Investing long-term
strategies
Knowledge basic economic
facts
Sour ce: Matthew Gr eenwald & Associates Sur vey, July/August 2004.
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Women:
• Score lower than men on their knowledge of investing and how the
financial markets work.
• Are less familiar than men with long-term strategies, such as dollar
cost averaging.
• Are less likely to know basic economic facts, such as the historical
rate of inflation.
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8. Facing unique financial challenges
Women Investment returns for major asset
classes, 9/30/80-9/30/05
Invest More less risk, more risk,
Conservatively
lower returns higher returns
12.8%
9.6%
Sour ce: Lipper , 2005. This infor mation is hypothetical and for
illustr ative pur poses only. It does not r eflect any par ticular
investment. Equity secur ities ar e mor e volatile than bonds 6.1%
and subject to gr eater r isks. Bonds ar e subject to inter est
r ate, pr ice and cr edit r isks. When inter est r ates r ise, bond
pr ices gener ally fall. Tr easur y bill r etur n r epr esented by the
Tr easur y Bill 1-Year Index. Tr easur y bills ar e guar anteed by Treasury bills Investment Common stocks
the U.S. gover nment and, if held to matur ity, they offer a grade bonds
fixed r ate of r etur n and fixed pr incipal value. Investment
gr ade bond r etur n r epr esented by the Lehman Br other s
Aggr egate Bond Index; stock r etur n r epr esented by the
Standar d & Poor ’s 500 Index. It is not possible to invest 8
dir ectly in an index.
According to the National Center for Women and Retirement Research,
women tend to invest more conservatively than men. They tend to favor
fixed income securities that are less likely to keep up with inflation over
time. They tend to shy away from more aggressive investments that are
more risky, but also have the potential for higher returns.
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9. Building on unique advantages
Advantage: more likely to women men
have a
Women financial
strategy
make impulsive
decisions
find it hard to
admit mistakes
Sour ce: Matthew Gr eenwald & Associates Sur vey, 2004.
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However, women exhibit behavior that can be advantageous in achieving
investment success.
• Women are more likely to have a formal financial strategy.
• They are less likely to make impulsive decisions that turn out poorly.
• And when they do make a mistake, they find it easier to let go.
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10. Building on unique advantages
Women More women involved in
investment decisions
Gaining
2004
56%
Ground 1996
21%
% of women as co-decision maker
Sour ce: Investment Company Institute, Profile of M utual Fund
Shareholders, 1996 and 2004.
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Women have also made great strides in their role as investment
decision maker.
• Take a look at this bar chart. It shows that the percentage of
households in which women share responsibility for investment
decision making has more than doubled over the past nine years—from
21% in 1996 to 56% in 2004.
• The data is based on an annual survey of U.S. households that own
mutual funds.
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11. Taking action for financial success
Five Steps Toward
Financial Success
1 Establish good credit
2 Join employer tax-deferred retirement plan
3 Invest regularly
4 Create a financial strategy
5 Work with a financial professional
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What can you do to put these unique advantages to work to secure your
financial future? Here are five steps you can take now.
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12. Taking action for financial success
Establish
Good Credit
in Your Own
Name
• Credit card in your name
• Checking or savings account
in your name only
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Step number one. Whether you are single or married, working in or out
of the home, it’s essential to establish credit in your own name and
maintain good credit. You can do this by having at least one credit card in
your name and paying your balance on time. It’s also a good idea to
maintain a checking or savings account in your name.
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13. Taking action for financial success
Join Your
Employer’s
Retirement
Plan
• Tax-deferral
• Matching funds
Sour ce: Thomson Financial, calculated by BlackRock, 2005. This infor mation is
hypothetical and for illustr ative pur poses only. It does not r eflect any par ticular
investment. Gener ally, mutual funds do not offer a fixed r ate of r etur n. An investor ’s
pr incipal is not guar anteed or pr otected fr om decline. The gr owth of your assets will
be based on an actual r ate of r etur n pr ovided by the investment you choose.
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Even if you are just out of college, you will need to begin to save now for
retirement. Many employers offer to match the money you set aside.
The most common match is 50 cents for every dollar you contribute, up
to 6% of your pay. Don’t pass it by. In your employer’s plan, retirement
savings compound more quickly because they can grow tax-deferred.
Contributions you make may also reduce current income tax.
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14. Taking action for financial success
Invest
Regularly;
Start
Today
Sour ce: Thomson Financial, 2005. A fund’s shar e pr ice, yield and r etur n will fluctuate and you may have a gain or loss when you sell
your shar es. This infor mation is hypothetical and for illustr ative pur poses only. It does not r eflect any par ticular investment.
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If you begin investing a regular amount in your employer’s tax-deferred
retirement plan or in an IRA, and your money grows tax-deferred at an
annual rate of 7%, you can build a substantial nest egg over the next 10
to 20 years, as this chart shows. You can accumulate more than
$102,000 for retirement by investing just $200 a month, if your
investments earn 7% annually. With a higher amount of savings you
could accumulate substantially more for retirement.
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15. Taking action for financial success
Create a Financial Strategy
• Save regularly
• Allocate your assets
• Choose your investments
• Monitor and rebalance your portfolio
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It’s a lot easier to reach your goals if you have a strategy that includes:
• Regular savings
• Asset allocation that shows how to divide your investments among
different types of funds
• Specific investments
• Monitoring and rebalancing your portfolio to keep it on track
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16. Indices used in this
seminar
Indices used in this seminar
The Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index
composed of more than 5,000 investment-grade taxable bonds.
The Standard & Poor’s 500® Index is composed of selected common stocks,
most of which are listed on the New York Stock Exchange, and is focused on
the large cap segment of the market, with over 80% coverage of U.S.
equities.
Treasury Bill 1-Year Index includes one-year instruments. The index is
derived from secondary market interest rates as published by the Federal
Reserve Bank in release H.15 (519).
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17. Taking action for financial success
Work with a Financial Professional to
Take Charge of your Financial
Future… and can help
800-882-0052 | www.blackrock.com
You should consider the investment objectives, risks, charges and expenses of
the fund(s) carefully before investing. For complete information about any of
the BlackRock funds, including objectives, risks, charges and expenses, you may
obtain a prospectus from BlackRock Distributors, Inc., 760 Moore Road, King of
Prussia, PA 19406. 800-882-0052. Please read the prospectus carefully before
you invest or send money.
BlackRock Distr ibutor s, Inc. is the distr ibutor of 50 mutual funds. Print Seminar and Speaker Notes
| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | 17
With so much riding on financial strategy, most investors choose to
work with a financial professional. In fact, one reason that women are
reported to be more likely to have a financial strategy is that they are
more likely to have a primary financial advisor. When you work with an
advisor, you gain access to professional knowledge, expertise and advice.
Your advisor can help you take action—and take charge of your financial
future.
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