• Hannah

Planning and Investing for Value

When it comes to investing in the stock markets, there are a variety of categories to invest in. For example, you can invest in domestic, foreign, or emerging companies or you may choose to invest in small, medium, or large companies. There’s also the option to invest in what are known as growth or value companies, or a blend of the two. Historically, value-based investing has been based on the stability of a company and the fundamental health of its operations. Analysts look at metrics like a firm’s P/E – its price to earnings ratio – or they may focus on the consistency of its dividends or the strength of its sales to determine whether or not it might be a good buy. There have been times when investing in value versus growth has been a great call, causing value tilted portfolios to outperform. While there is certainly an argument for this kind of approach, I believe that the industry as a whole may be headed towards a new kind of value-based investing – investing for values – and I believe women will have a very crucial role to play in that shift.


In September of 2018, PIMCO released the findings from a survey they conducted regarding the role of wealth management in the lives of women (you can find the full report here).[i] Among other things, they found that for women, financial goals are “more purposeful than cumulative” meaning they care more about how their wealth can enhance their current lifestyle than they do absolute returns, with 84% of those surveyed responding that “they see investing as a tool for creating choices in life.” The report also noted that in addition to wanting to invest to empower themselves in the present as well as the future, that women want a holistic approach to investing for the things they value with 82% noting that they want to invest in companies that “do no harm.”


While these sentiments are not necessarily new or even revolutionary, they are starting to gain attention, particularly as women are expected to hold a larger proportion of wealth in the years to come. For the first time in history, women in the U.S. gained control over the majority of wealth in 2015 and now hold 51% of the country’s personal wealth with that number expected to rise from $14 trillion to $22 trillion by 2020. This shift in wealth has caused the financial services industry to take greater notice of its female clients, even as it struggles to employ female advisers and fund managers. As of August of 2019, the CFP board reported only 23% of those holding the Certified Financial Planner designation were women, while a report in 2016 from the CFA Institute noted that only 18% of its charterholders were women.[ii][iii]


In response to this market shift, I suspect we will see more and more women being encouraged, and choosing to enter the financial services industry. But I also expect the industry itself to fundamentally change as individual investors seek to do good with their wealth. Gone are the days where we invest simply for more. Instead, we will invest in good companies that are doing great things and we will invest so that we can also do good with the resources at our disposal. Here at Lovely Abundance, we are consciously choosing to lean into this shift. We want to be a place where our readers are empowered to use their resources to pursue the things they care most about. We invite you to poke around our articles and pick up some tips and tricks for investing and planning for a life of abundance. You can also check out our events page and RSVP for any of our upcoming workshops. Wherever you’re at on your financial journey, we hope that you're inspired to make the most of your time, your energy, and your wealth to live out your values and make the world a lovelier place.


[i] Pimco. “Women Redefining Investment Performance.” Pacific Investment Management Company LLC. PIMCO, September 29, 2019. https://www.pimco.com/en-us/our-firm/diverse-perspectives/redefining-performance?utm_medium=email&utm_campaign=3843252-MKT-00000-US-CAMP-Other-Women+and+Investing+phase+4+-US+links&utm_source=exacttarget&utm_content=access+button1&utm_term=Token:vDKxEI-moRbbVkw-Ws-UVhSjixoISHRHsj25ln4xxMU1.

[ii] “News & Events.” CFP Professional Demographics. CFP Board, August 31, 2019. https://www.cfp.net/news-events/research-facts-figures/cfp-professional-demographics.

[iii] “Gender Diversity in Investment Management.” Gender Diversity in Investment Management. CFA Institue. Accessed September 29, 2019. https://www.cfainstitute.org/-/media/documents/article/rf-brief/rfbr-v2-n5-1.ashx.

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hannah.boundy@sherwoodfp.com

Arvada, Colorado

Westlake Village, California

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