Single and Scared
Stock market turmoil has many single professional women worried about their dwindling nest eggs. Here's how to take charge.
These rocky times are especially difficult for women who will rely on no one but themselves financially. But that realization can inspire action. I've been specifically counseling single professional women that:
1. They cannot afford to back away from owning stocks. If they're building wealth, they have to take risks. In fact, if they have cash that they don't need for other purposes in the near future, they should be adding to stock positions.
2. Stocks need to be diversified. It's no longer appropriate to own 20 individual companies and consider yourself diversified. Broad, low-cost indexes, foreign and domestic, are usually the best option for long-term investors.
3. Even while taking necessary stock risks, most investors should realize that the majority of their retirement dollars will come from savings, not from investment returns. Now is the time to give savings a permanent raise.
Finally, outside the concerns of the stock market, a single woman must always have access to a cash reserve should her job be eliminated, and she needs disability insurance more than she needs life insurance (unless she's supporting children or parents).
Mary Claire Allvine is a certified financial planner at Brownson, Rehmus & Foxworth Inc. She is co-author of The 7 Most Important Money Decisions You'll Ever Make (Rodale, 2005).
Stocks need to be diversified. It's no longer appropriate to own 20 individual companies and consider yourself diversified.
