Raise your daughters to be investors
“Over the last 12 years, the share of women who have amassed sums of $1 million or more in their retirement plans has doubled, according to research conducted by the investment firm Fidelity… About 20 percent of its 401(k) millionaires were women as of the end of September, the firm found, up from just under 10 percent in the same period in 2005.”
—The New York Times, “Some Women Achieve an Enviable Status: 401(k) Millionaire,” 11/24/17
We’re that much closer to gender parity in money management—and specifically in retirement savings, one of the most important financial priorities any of us has. That’s a good thing.
Of course, as Tara Siegel-Bernard noted in this New York Times analysis of the Fidelity study, women who have achieved 401(k) millionaire status represent a segment of the population that has been stably and gainfully employed—and largely well compensated—over a sustained period of decades. They may also have had advantages like health insurance and assistance with childcare that allowed them to fund their accounts aggressively.
For too many women, this is not the case. And that’s why it’s so important to be mindful of how we talk to our kids about retirement, investing, and all other aspects of money management—especially when it comes to the different conversations we might be having with our daughters and our sons.
According to T. Rowe Price’s annual Parents, Kids & Money Survey, a majority of parents spend more time talking to boys about money than they spend talking to girls. Yet the same survey found that parents say girls and boys are equally likely to be interested in financial matters.
We need to respond to our daughters’ questions about money, and keep that conversation going. Perhaps fear of taking on complex—and depressing—subjects like the gender pay gap keeps parents from opening up to girls about personal finance. But that approach ends up reinforcing the money divide between girls and boys, and the men and women they grow up to be.
When the time is right, girls should learn about the economic odds they face; there’s no sugarcoating it. But there’s a lot to be positive about, too. Studies have proven women are more consistent than men when it comes to investing, keeping their money in place rather than rashly withdrawing it in response to the market’s dips and dives. The calm and steady approach almost always results in a higher yield.
So raise your daughter to be an investor who will save smartly, early and often. If you do, it’s more likely that she’ll get her million, too.