Female executives are among the most driven and hardworking people I know. They make huge sacrifices for their work, often prioritizing it over personal achievements and milestones. Thankfully, my clients who fall into this category are most often extremely well compensated for their efforts and commitments to their work. They’re bringing in huge salaries, but often also living an expensive lifestyle to match.

Even on a high income, it can be all too easy to miss important financial planning markers by not saving sufficient funds and thinking about retirement investment strategies. So this is regularly the first thing that new clients want to talk about when we set about establishing a robust financial plan for them.

Retirement investment portfolios can be set up at any stage of your career, even right up until and beyond retirement. So it really is never too late to start thinking about it, although the life stage at which you do so is one of the factors that’s going to greatly affect the strategy you’d be advised to pursue and the choices you have. But what else might affect your decision making?

Retirement Investment Strategies Must Be Tailor-Made

One thing I noticed very early on in my career in financial services is that most conventional financial advice does not cater for women. It doesn’t take into account their unique challenges and circumstances. And it also doesn’t take into account your own personal goals. But it is impossible to plan for the future if you don’t know what shape you want that future to take.

Your retirement investment strategy is a vital part of this picture; your goals and your strategies push and pull against each other all the time. They need to be working in tandem, completely in sync. Your goals need to shape your retirement strategy, and your retirement strategy needs to accommodate your goals. Only then can you live the life you want, and the life you deserve. The life you’ve worked so hard for.

These goals may include where you want to live, career or business development to maximize income and satisfaction, your lifestyle in retirement, supporting children through education, or setting them up to stand on their own two feet early on, supporting your aging parents. And they’re not just goals for retirement; these are lifetime goals. So if you’re in the early stages of your career, saving for a home may be a more pressing need than aggressively investing for retirement. Owning your home outright before retirement may also be a very important part of your plan.

In this way, your retirement investment strategy has many moving parts to it, and your entire financial landscape needs to be considered.

Time And Risk Are Crucial Factors Too

Once you’ve decided on your personal goals, you will be able to map out a rough timeline for achieving those goals. How much time you have is going to make a huge difference for your retirement investment plan. For example, someone who is starting to put money aside in their thirties may well have a very different strategy to someone who is plotting their retirement investment map out in their fifties. Again, your choices will change depending on when you start to focus on your goal of retirement.

The other factor that will have a bearing on your retirement investment strategy is your risk tolerance. By this we mean, your appetite for risk, and we measure risk in portfolios by your stock exposure. Stocks are frequently referred to as a risk asset, since they are a bit more volatile than other assets like cash and bonds.

Stocks also tend to be the part of your portfolio tasked with growth. To provide a sound basis for your retirement planning, we often target a portfolio to grow at a rate of 6% annually – 2% to cover inflation, and 4% to provide the kind of growth necessary to see you through your retirement.

Many women can expect to have a retirement of 30 years; crucially, you need your money to last through retirement. If this sounds daunting you might want to consider partnering with a financial advisor. You’ll get that uplift in confidence, and direction as to how you can invest your money in such a way that it is going to support you for the rest of your life, and help you to achieve all your goals.

How you invest your money completely depends on the goal of that money. If you have a short-term need, such as a house downpayment in two years, you truly cannot afford to take a risk with that money. It is likely best saved in cash and not invested. However, for longer term goals like retirement, you may be able to take more risk by investing it in a diversified portfolio. How you invest will depend on the purpose of the money, your risk tolerance, and your time horizon for that goal.

Are You Risk-Averse?

In my experience, many women are fairly risk averse, but this – I believe – comes down to our fairly recent entry into the world of finance and investing, and a lack of confidence. Women like to be fully informed before making risky decisions, and their risk tolerance will increase as their knowledge base increases.

But while that seems to be the case on a population level, many of the entrepreneurial women that I know and work with are not afraid of risk at all. In fact, sometimes they may be a little too keen on investing aggressively, trading stocks regularly instead of adopting a buy-and-hold approach. While this kind of investing can occasionally see some big wins, it’s an approach that rarely stands up long term.

On the whole, women are excellent investors. They’ve been shown to make better and less costly investment decisions than men more often, and their portfolios often outperform those of their male counterparts. Getting some financial advice and equipping themselves with the knowledge they need to become confident and strategic investors is an ideal first step for women when thinking about their retirement investment strategy. It means they will be more in tune with the risks involved with their investments, and be able to plan accordingly.

Consider Your Asset Allocation

You need to consider the different types of investments that can fund your goals. When you’re considering your investment strategy, it’s essential to build diversification into your investment portfolio. This lowers your overall risk, by preventing you from putting all your eggs in one basket.

By investing in a variety of areas, or in a variety of stocks for example, essentially you are reducing the risk you’re subjecting your portfolio to. Some investments will have a higher yield but greater volatility, others will reliably produce a steady income for you but at a much lower rate of return. If one area of the market crashes, your investments elsewhere will lessen the blow.

We also know that having a diversified portfolio allows for a larger withdrawal rate in retirement. This is a percentage of your portfolio that you can take out for income in retirement. So, diversification is truly important to grow your portfolio, and to allow for the income you’ll need in retirement.

For most of us, the main categories of investments are are likely to be:

• Stocks
• Bonds
• Cash
• Real Estate

Splitting your funds for investment into different areas is known as asset allocation, and as you age, the way in which you want to allocate your assets may well change. When you’re younger, you might want to invest far more of your money in fast-growing but volatile stocks, for example, and less in bonds. And as you approach retirement, you may want to be more cautious with your money and you may well prefer to invest more in reliable but slow-growing bonds, and less of your money in stocks.

You may also want to consider your investments in terms of their liquidity too, which refers to your ability to liquidate an investment, sell it and turn it into cash. For instance, stocks are very liquid since you can sell them in the market at any time. Private placements are not liquid since they may only allow for liquidation at certain times over the course of years.

Create A Tax-Efficient Retirement Investment Strategy

Another extremely important factor in your retirement investment strategy is tax. This is where it is important to take advantage of any tax deferred retirement account options you have, such as your 401k, Health savings account, IRA. It’s also where having a collaborative and strategic Certified Public Accountant (CPA) is key . You want to minimize the tax you pay, and maximize your tax deferred investment options. Make sure that you have researched all the options you have thoroughly, and know the impact that they will all have on your tax bill.

You will also need to weigh up how much an investment will generate for you over time, but also how those gains will be taxed. There are a lot of differences between different investments; some will generate tax-free income, and others are tax-efficient. Some vary with how they are used, or how long the investment is held for.

The investments you choose may or may not be tax efficient, which can affect your overall performance. If you have stock options you will want to know when you are taxed, how you are taxed at vesting, and if you need to save additional money for taxes given withholding. You’ll also want to know what taxes to expect once you sell your stock. Having a tax strategy around options is critical to avoid a tax mess. There are also ways to offset gains against losses with what’s known as tax-loss harvesting.

Some savings accounts, such as health savings accounts, are extremely tax efficient. They can be contributed to pre-tax. Then the earnings grow tax-free, and distributions are then also made tax-free, as long as they are only spent on qualified health expenses. Seeing as the average American woman will spend $150,000 on health expenses over their retirement, this can be a great part of your retirement investment strategy.

Empower Yourself To Make The Right Choices For You

When I work with a client, I tell them that their investment strategy must be a holistic strategy; it must encompass all the other aspects of their financial plan, as well as their life goals. It must accommodate and allow for their passions and pursuits. They must thrive, and look forward to a joyful retirement, whatever that looks like to them.

So that’s why I really get to know my clients. I want to know her aspirations, her plans, her dreams, her loves. I want to know every last little thing that is important to her and makes her life and her journey unique to her. All of those elements will go into creating her retirement investment strategy, which will work in harmony with her overall financial plan.

The important thing is to empower yourself with the knowledge of how it all works. Then you can feel confident in your decisions, and comfortable with the future stretching out in front of you. You will know that while you are working incredibly hard as a female executive, at the forefront of your business, your money is also working hard for you to give you the future that you would choose for yourself.

So do what women are so good at doing: collaborate. Find that collaborative community. Learn from people around you. Reach out for advice, to learn and equip yourself with knowledge and wisdom. If you don’t yet have a financial advisor as part of that collaborative community, please reach out to me. We can start to plot your journey to a retirement of comfort and satisfaction today.