When Gargi Pal Chaudhuri graduated from college in 2001, she landed a plum job as a bond trader. The move plunged her right into the intense world of Wall Street and she jumped into the challenge of investing for her firm and its clients. But at 22, living in New York City and trying to make ends meet, she didn’t do the same for herself.
“I didn’t even start putting money in my 401(k),” she says, acknowledging that she definitely left matching dollars on the table because retirement seemed so far away. “It was a big mistake,” she says in hindsight.
And it wasn’t the only one she made. Seven years later, the financial crisis hit. By that time, she had started investing for her own future. But she panicked – and got out of the markets just as they neared the bottom. “Now, 18 years later, looking back I realize how costly that was. I didn’t realize how important it was to get invested and stay invested.”
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That’s one big reason why Chaudhuri, who today is the Head of iShares Investment Strategy Americas at BlackRock, is on a quest to make sure other young women aren’t following in her footsteps. She knows that her job puts her in a position to spread the message that investing not only needs to be a lifetime endeavor for any woman who wants to secure her financial life, it’s also more accessible and less costly than you may think.
Saving Is Important, But It Isn’t Enough
According to research from BlackRock, more women (43%) than men (41%) say they put a high level of priority on saving money in order to facilitate living a comfortable life in retirement. That’s a message Chaudhuri received loud and clear from her parents. “When I was growing up, maybe because I’m Indian, there was a lot of focus on saving,” she recalls. “My parents would say things like, ‘make sure you’re saving x percent,’ or ‘you always want to have cash in hand.’”
Perhaps a sea of messages like these is responsible for the fact that BlackRock data shows that women keep 71% of their assets in cash compared with 60% for men. But if we truly want to build wealth for our futures, we should be putting our money to work, Chaudhuri says. The message has to be about “accessing the public markets, the stock markets, the bond markets,” she says. “I didn’t hear that story enough. We’re very passionate about doing something with your money. Otherwise, you’re going to lose out on those investment returns.”
There’s A Gap To Cover (And It’s More Than Wages)
Historically, Chaudhuri has a point about those returns. The average return on cash from 1928 to date has been 3.3%. Compare that with the 4.6% that bonds have returned on average during the same time period, and 9.6% for stocks. Put another way, if you had invested $1,000 in cash at that rate of return over 40 years, you’d end up with $3,737. In bonds over the same time period, you’d have $6,274. But in stocks? $45,820.
Of course, you’d be hard-pressed to find many people who would turn down stock market returns in favor of those in bonds or cash. But there’s an argument to be made that women, in particular, need that money more than men. It’s not just the stubborn gender wage gap that these days has the average woman earning 82% of what men do – a number the Pew Research Center points out has barely budged since 2002. Or that Black and Brown women earn substantially less than that by comparison. “There’s also the fact that women tend to outlive men,” Chaudhuri notes. “That’s good news. But it means you need more money to last that longer period of time.” Women are also the ones, typically, who take time out from the workforce to care for children and older parents. That means both fewer Social Security credits and less overall money in their retirement accounts. All of this makes those investing returns even more important.
Get Started In A Way That Fits You
The fact that women tend to have a greater need to invest, however, does not mean that all women should be investing the same way. Personal factors need to be considered in each case: Age, risk tolerance, family obligations, goals. “It’s important not to think of investing as one-size-fits-all,” Chaudhuri says. “Think of doing something that fits you.”
And then, just begin. Put some money to work in your 401(k) or work-based retirement account, open an IRA of your own. “For women, this is one of the ways we can gain equality,” Chaudhuri says. “There is no greater way for us to improve our own path toward financial freedom than investing in the market.”
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