Suzette von Broembsen, Wealth Adviser at PSG Wealth in Rosebank shares her input on gender pay and portfolio management.
Have you ever found yourself starting a Saturday evening dinner party, holding a glass of champagne, discussing your most recent salary slip? Probably not. Such a scenario is rare, as most people avoid mixing financial matters with social gatherings. It could lead to an early end to the evening, leaving your delicious roast chicken untouched, and ultimately used as your lunchtime sandwich at work the next week.
South Africa, like many other countries, experiences a gender pay gap. Women are often presumed to earn slightly less for equivalent work or, even worse, are expected to work harder due to their roles in managing both family and careers. This might be a result of how we were raised, but the world is evolving, and it’s likely that future generations, like our daughters, may enjoy more equal outcomes.
According to the World Economic Forum, the gender pay gap in South Africa is on average estimated to be between 15% to 17%. This means a South African woman would need to work two months more than a man to earn an equivalent salary in the same year. This is not a statistic that sits comfortably as it highlights that progress in addressing this issue has been slow, despite efforts like the Employment Equity Act of 1998.
Looking beyond national borders, World Bank data indicates that women in South Africa have relatively better scores in terms of equal rights compared to women in other countries like China, Russia, Malaysia, and India, some of which score as low as 35%.
The good news is that there are opportunities for women in our country who aspire to take on similar responsibilities as their male counterparts. Traditionally, our fathers were the main breadwinners, but modern households have witnessed a shift, where caregiving responsibilities are more equally distributed, opening the door for women to pursue equal income options.
Having an investment portfolio of your own, has an interesting impact on behaviour – it provides a sense of confidence, increases our ability to take risk (we have a buffer if things don’t work out, we can choose to work for a share of profit or commission vs. a fixed salary) and it offers us opportunity to understand that success does not happen in a straight line.
Tips for building your portfolio
Here are some tips for building your portfolio smartly, even if you earn slightly less than your male counterparts:
- Start small and start young: Cultivate saving habits early in life to ensure financial security later. Behaviour when you are young will most likely remain as you get older. You will most likely not learn how to start saving at 50. By then you are used to luxuries in life and won’t wish to give them up, it may be too late.
- Be tax savvy: Opt for tax-efficient investment options like endowments, retirement annuities, and capital growth investments as opposed to interest earning investments, which could be taxed at a higher rate.
- Utilise tax-free investments: Take advantage of monthly debit orders into a tax-free investment, which provides the ability to later supplement your income with no tax implications (remember to remain within the annual and lifetime contribution limits).
- Save a substantial portion of bonuses: Save 50% to 70% of your bonus in long-term investments and treat yourself with the remaining portion.
- Create a budget: Take an active role in managing your finances by having a well-planned budget. This role does not solely remain with your husband, if we wish to be rewarded equally in the corporate world, we need to take on the responsibilities for finances at home as well.
- Automate monthly savings: Set up automatic debits for investments to ensure disciplined saving. It ensures the money is invested without you consciously thinking of it, which mostly results in a positive experience over the long term.
- Invest in higher yielding assets: Consider long-term growth investments to counter the impact of inflation.
- Keep emergency funds secure: Allocate only three months’ worth of emergency funds in liquid investments, while the rest should be part of a long-term growth portfolio.
- Monetise your hobbies: Explore opportunities to turn your hobbies and skills into extra sources of income.
While these guidelines offer valuable advice, remember that each investor’s situation is unique. Consulting a financial adviser can help you make informed decisions and avoid costly mistakes.
Lastly, history has shown that women tend to be better investors than men due to their less target-driven and more patient approach. Utilise this advantage when negotiating salary increases and pursuing financial goals.
Written by Suzette von Broembsen, Wealth Adviser at PSG Wealth in Rosebank
Affiliates of the PSG Financial Services Group, a licensed controlling company, are authorised financial services providers. www.psg.co.za
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Feature Image: Supplied.
