Streetwise for Sunday, February 10, 2019
Valentine’s Day is almost upon us once again, which means that it is time to repeat what many readers believe are some of my most sage words of advice.
While those little blue Tiffany boxes are certainly welcome on Valentine’s Day, surveys show that women also have a strong affinity for Tiffany’s (TIF) shares (15 years of dividend growth with a 10-year growth rate of 14.3 percent and a 12-month projected share price of $104).
Women hold Tiffany’s shares two-to-one over their male counterparts. To some degree it is just another form of buy-what-you-know. Women also tend to be more patient and calculated than men.
Once they have made up their mind, women in general become buy-and-hold investors. You would think that they had just read “The Intelligent Investor,” by Benjamin Graham ($13.49 at Amazon) and subscribed to his wisdom. (Note: The book is among the top three books recommended by Warren Buffett.)
Yet, all is not right in OZ. Gender inequality has not gone away. The World Economic Forum wrote a year ago that “equality is in retreat” for the first time since the group started tracking the issue in 2006.
The report, which examines gender imbalances in the workplace, along with the areas of education, politics and health, found that years of global gains made by women are starting to erode.
The organization described 2017 as “a bad year in a good decade,” noting that the global gender gap will take exactly 100 years to close at the current rate of progress. The year before the forecast was 83 years.
The timeline is even worse when the researchers looked at just economic or financial inequality. That gap will take 217 years to close if the current slow rate of progress continues. Yet, recent events suggest that maybe the outlook is improving, and investing can only help that trend.
Although a degree of investment knowledge should be mandatory for everyone, it is often not at the forefront of either gender’s thinking. After all it was not until the Great Recession that anyone gave serious credence to the possibility that their blanket of financial security could be torn away.
Add to that the rise in the divorce rate, the increase in expected female longevity and an increasing number of women who chose to remain single and a woman’s ability to manage her investments has greater importance today than 23 years ago when I first broached the subject.
Every woman needs her own account with a deep discount brokerage firm. The deep discount aspect is not just a monetary issue but a barrier against relying on the “advice” of stock brokers. Discount firms do not give advice.
Yes, I can once again expect a tirade of angry comments challenging the need for a married woman to have and to manage her own portfolio. Unfortunately, statistics embrace the assertion that she does have the need. For example, women reaching the age of 65 can expect to live an additional 25 years and could face outliving their financial resources.
The good news is that a woman can take control of her financial destiny at any time. Over the years, I have seen numerous examples of women who have established their own portfolios, added to those portfolios regularly and thus have greatly reduced financial concerns and/or dependency. And they often have had to resist the entreaties of others to change course.
Yet, even the best of intentions can go astray. Statistics indicate that working women on average put aside about 1.5 percent of their income. Not enough. Everyone regardless of gender should put aside no less than 10 percent of his or her gross income each year. Do not write to me telling me to do so, “hurts” too much. Having to spend your golden years working at the Golden Arches will hurt a lot more.
So, assume you subscribe to the idea of an equity portfolio and you want to add to that portfolio regularly, which stocks should you buy? Here is a suggestion to start with. Limit yourself to investing in 10 to 15 companies with a 10 plus year history of continually increasing dividends.
Keep in mind that chocolate contributes to your waistline; stocks contribute to your wealth.
Lauren Rudd is a financial writer and columnist. You can write to him at LVERudd@aol.com. Phone calls accepted between 9 AM and 3 PM at (941) 706-3449. For back columns please go to www.RuddReport.com.