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Transcript
Saving money is important, actually for everybody because everybody can encounter situations where there is sudden need of financial support for themselves or for family members, friends or whatever situation life might put you into, and then it’s very important to have some financial background that you can manage in this situation, which you can encounter all of a sudden. So saving is just to have some financial means for sudden situations, and the other thing is prepare for the future. Maybe preparing for setting up a family or preparing to buy a house or preparing for the elderly for the time when you are not going to work anymore.
And the issue for women is that the income is necessary to have savings to put something aside from. The question is, is the woman does the woman have an own independent income or is she relying on the income of their husband or friend, if they have a family together? Because especially in connection with pensions, pension payment are done from the regulary income and if in the traditional role model, the husband is the breadwinner, then there is no pension income for for the woman in a way, if somebody is married here in Germany, the woman has a part of it if there’s a divorce, but otherwise there is an income stream going into pension payment from the income of every person. And if the woman has no independent income, then there is no independent stream for them. And therefore it’s important to think about having savings because if people will really have in the end a decent pension from this pension payment is not always clear. It depends on the system you’re paying into.
Savings should be invested because in general we have inflating prices. So if the money is not generating any kind of income, then in the end you can not buy the same things with the money from the time point when you have saved it, so investing and generating income from savings is always a question between risk and return. In general, in any investment decision is the question ‘What kind of risk I’m willing to take?’ Risk means losing part of the funds or everything, against ‘what kind of income I want to generate?’ The traditional saving is putting the money on the bank and getting some kind of interest like 3 percent above or more or less.
And this model for 10 years now in Europe has not worked because we have such a low interest rates that you cannot generate income on your savings with that. But to invest, for instance, in any volatile risk bearing assets like shares or options or whatever, you need to understand what you are doing because you bear a risk of losing the essential part of your savings. And therefore you need to learn about that or you need to have a trust worthy advisor like somebody from the bank but these people cost you money.
Or you find a kind of in between investment possibilities. A lot of people now invest into ETFs, which are just financial instruments, just following indexes. And they have shown in the last ten to fifteen years to be quite successful in connection with very low costs connected to that. So therefore it is first of all, a question for yourself. From my savings, how much would I like to invest? More risky to have a higher return. How much I would like to have just put in a safe place? and there are very interesting models available, books to help women to calculate what actually is available for me for a monthly saving? First of all, and then when you have a certain amount on your account, then you should think. Okay, what kind of home I want to have on the safe side. Because this is something I think I always want to have this kind of safety fund for any potential, whatever suddenly can happen. And what kind of amount is maybe on top of it which can be invested? And then the question is, how risk averse am I? And have I access to advisors or to education to learn about investing? There are advisors, especially for women.
There are books available for women to learn to understand the instruments. Nobody need to make an MBA for their savings. There are instruments about a basic understanding of risk and return, and then finding advisors or people who select potential investment possibilities. Investing this money is for gaining return on your savings and then generate more savings from the savings.
