Has it ever occurred to you that women are likely to face unique financial challenges, due to a longer expected lifespan? As women, we are more susceptible to a range of issues such as economic recession, retirement, potential health concerns and widowhood, making it highly essential for us to take control of our financial futures.Â
To help you along your journey, we invited the founders of Wahine Capital, a digital vault designed by women for women, to answer your pressing financial questions through our latest Ask The Expert session. Rejina Rahim and Sherry Sheriff share their expert advice on investing, joint accounts, financial protection and a range of other topics relevant to financial security and independence for women.Â
Securing the family’s future
Unsurprisingly, many mamas weighed in with their concerns about safeguarding and protecting their children’s financial future. From education, insurance policies and growing our kids’ wealth, the experts weigh in.
How can my husband and I grow our children’s wealth and help to save for their future?Â
Rejina: Depending on your disposable income, it would be helpful to allocate an amount for each child each month in an investment account such as the PNB funds, or in a Roboadviser like Stashaway. I personally used to do dollar-cost averaging until my kids hit 18 years of age, and then passed the funds to them at the age of 21. Dollar-cost averaging is a simple investment strategy that can help to reduce the impact of market fluctuations and make investing less risky over time.
Here’s a simple explanation:
Imagine you want to invest in something (let’s say stocks, or cryptocurrencies). Instead of investing a large amount of money all at once, you decide to spread out your investments over regular intervals, either monthly or quarterly. Let’s say it’s RM50 a month. With dollar-cost averaging, you invest the same RM50 consistently at these intervals, regardless of whether the price of the investment is high or low. When the price is high, your fixed amount will buy fewer shares or units of the investment. Conversely, when the price is low, your fixed amount will buy more shares or units.
This approach has a couple of benefits. First, it helps you avoid trying to time the market, which can be challenging because it’s difficult to predict when prices will rise or fall. Instead, you’re consistently investing, regardless of market conditions. Second, by spreading out your investments, you can benefit from the concept of “buying low”, because you’re purchasing more units when prices are lower.
Over time, this strategy can help smooth out the highs and lows of the market, and potentially lower your average cost per unit. It can also alleviate the pressure of making investment decisions based on short-term price fluctuations.
Remember, investing always carries some degree of risk, and dollar-cost averaging doesn’t guarantee profits, or protect against losses. However, it can be a useful strategy for long term investors who want to minimise the impact of market volatility and steadily build their investment portfolio.
Sherry: I opened a savings account for my children when they were born, and direct debited an amount on a monthly basis. I also got an education insurance. I was lucky that I didn’t have to use the whole sum for my children’s education. I gave the rest of the money to my daughter (who is now working) when she decided to buy an apartment, to help with the down payment and mortgage.
[With regards to financial literacy], I must admit that I started teaching my children about money a bit late. I wish I had started earlier. I started when they were in their teens, and I think they learned most when they had to manage a budget on their own, as they studied away from home. When my daughter started working, I encouraged her to consider investing in a small property, like a form of forced savings. At least her salary is partly going towards something that can be a part of her future wealth.
I’m planning for my retirement and my children’s education. What are the easiest and most worthwhile types of investments (or insurance policies) for the long term?
Rejina: Questions you [first] need to figure out include:
- What timeframe do you have before retirement?
- How long do you have before your kids go to university?
- Are you planning to send them overseas, locally or do a twinning program?
- What are your monthly expenses and how much do you need to maintain your lifestyle after retirement?
- How much savings and investments have you got now?
Inflation must also be taken into account, as this would affect your nett returns. Be mindful too, that education inflation is in double-digits now.
If you are looking for safer and more stable investments or are a first-time (or cautious) investor, I would recommend trying out Roboadvisers like Stashaway, Wahed or Raiz, as the fees they charge are a lot cheaper since they use Exchange Traded Funds– essentially a stock that tracks the entire major index like the S&P500. The US market makes half of the global market and even local or regional brand names are listed in the US, so a global equities fund would definitely be worth considering.
Money Matters in (and out of) a Marriage
Joint account? Who pays for what? Who supports the kids in the event of a divorce? Deciding to spend the rest of your life with the love of your life also means you will be spending the rest of your life managing finances together. Regina and Sherry provide valuable insights to help you navigate these important discussions and make informed decisions for a more secure financial future.
What kind of conversations should I be having with my husband, to prepare in the event of terminal illness or unexpected demise? What are the critical issues we should square away and the potential pitfalls I should be aware of (in terms of wasiat/will etc)?
Sherry: We think it would be helpful to first explore the types of topics or questions spouses should be sharing with each other, with a view towards preparing for the future. This could include transparency in terms of sharing financial history, how partners could [best] combine finances (and which to keep separate), and how best to protect each other financially (e.g. with beneficiary designations, life and disability insurances, estate plans, etc.)
About Terminal Illness
Rejina: [Some] questions I would start with would be as follows, if I was having this conversation:
- How much medical coverage have you got? Is there a yearly limit and do we need to top up if we want a single room? Have you figured out how much hospitalisation leave you get, before its a no-pay?
- What if you lose your job? Have you got any medical coverage for us?
- Have you updated the beneficiaries list for your EPF and PNB?
- Where do you keep all this information?
About wasiat and wills
Wasiat and wills will have very different treatments. Our W Vault pre-populated fields are what lawyers would require to help execute the Grant of Probate or Letter of Administration. Conversations about death are difficult, and can be construed the wrong way. You will need time to build the conversation and eventually be able to sit down and talk about practical things, like money and wills. Conversations should start from a place of care and compassion. Underlie the fact that this is a partnership, and that as partners, you need to discuss the eventuality of one of you not being around, be it because of illness or death.
What are your plans for the future? What would it look like should anything happen to one of you? How do you prepare so that it would not affect the children too much financially? How would you want your own assets divided, should anything happen? In some families, they have these conversations with the extended family as well, because they want to make sure if something happens to both of them, that they have [already] communicated to another family member that they want their children cared for by a [chosen] sister/ brother etc.
Here are five things you need to ask yourself, when writing a will or wasiat:
- Do you have a complete list of all our assets and liabilities, in case anything happens?
- Do you have assets that include immovable property, that would be worth more than RM2 million? This will affect where the hearing will be done, and how long the process will take.
- Do you have enough liquid assets to deal with the costs of lawyers and trustees to administer your estate after you pass on? (Amanah Raya charges RM27,7500 for every RM1 million, and it can cost you between RM300 to RM25,000 to actually write a will).
- Are you a Muslim daughter, and do your parents only have daughters with surviving uncles and male cousins? This will affect the Faraid distributions.
- Â Do you know you can only will up to 30% of your assets if you are a Muslim, and this must be to people who are not covered under Faraid and must be Muslims- thus, reverts with non Muslim family members must be aware.
As women, should we share details about our finances or income with our husbands? It is better to have multiple bank accounts or just a shared account?
Rejina: Not all couples like the idea of a joint account. Which is why we designed W Vault so that your partner, husband or loved ones can only require access to your important financial information when necessary. At the end of the day, whether or not you share your financial information with your husband depends on you.
Sherry: I agree. Some couples have a shared account for shared expenses, like expenses for the household and children. Each partner puts in a certain amount into that account monthly for that purpose. But they also maintain their individual accounts.
Other couples have separate accounts, but still share financial responsibilities. I know a couple where the husband pays for education, and the wife pays for everything else, and it comes up to about equal. Whatever the structure, this is a very important conversation you need to have with your partner. Being open about finances and how to share the burden of bills etc. is necessary to avoid misunderstanding or other negative feelings that could affect the wellbeing of the relationship.
In the midst of a messy divorce and he only wants to pay a small sum for our kids’ education. Should I agree to this as part of the settlement agreement, or hold out until he agrees to a larger sum? How do I ensure financial stability for my family as a single mum?
Sherry: Divorce laws are different for Muslims and non-Muslims in Malaysia. In both cases, parents are required to have a settlement agreement, a part of which will include the finances for the care and education of the children. Under Muslim law, this responsibility falls as part of nafkah anak and is the responsibility of the husband.
For both cases, the courts will refer to the capacity of the parents (i.e. what they can afford). If you cannot negotiate bilaterally to reach an agreed sum, you may wish to bring the issue to court. You will need enough evidence to show that your husband can afford a larger sum (e.g. with salary, assets, etc). If you are having a difficult time discussing these things with your ex-husband, know that you are not alone. The biggest disagreements in divorce are the children’s custody, and the finances and assets. At the end of the day, only you can decided whether to accept what your husband offers or to hold out for more. I am a single mum myself, and yes, financial stability for the children is something that has kept me awake at night.
Create a budget which not only includes the essential costs, but also other things like holidays and meals outside, birthday gifts etc. From there, you will see what you can afford, and what you need to perhaps put aside for the time being. I talk to my children about the limitations I have as a single mum. Bring them into the conversation gently. Make them understand slowly why things have to change. Mutual support between you and your children is very important in these trying times, particularly if you are the primary or sole caregiver. Have a support system around you, whether with family or friends. Don’t be afraid or ashamed to reach out to the people around you. You will find your tribe. There will be a lot of pressure and difficult decisions, and if you know you have people you can turn to, you will hopefully be in a good place mentally and emotionally to make better decisions. Trust me, you will be stronger, and it will be easier with time. If you need to just talk to someone about this, Wahine Capital also provides micro-consults on the divorce process and challenges.
Rejina: There are a host of issues that you need to be mindful of. Our network of experts include [those that can assist with] divorce counselling. Do sign up with W Vault to gain these free resources.
Protecting ourselves, growing our finances
As women, we should also have access to acquire the confidence, capability and knowledge to secure a sound financial future for ourselves. And this is what Wahine Capital is for – to empower women towards greater financial security and independence. Here are some tips on how to take ownership of your own financial wellbeing:
I’m a stay-at-home mum – how do I grow my money and protect myself financially?Â
Sherry: Firstly, being a stay-at-home mum is a job – so you have just as much right to the household income. You would have given up a career, and you’re saving up money for the family- money that would have been spent on childcare, cleaning, cooking and driving. There is monetary value to what you do. Don’t undervalue your job as a full-time mum.
Secondly, think of whether this is a long-term thing or whether one day you intend to go back to work when the children are grown up, because this will affect your financial planning as well.
Third, in a healthy relationship, decisions on finances should be in partnership. Try and have regular communication about your family finances, and don’t leave your finances only to your husband. Better yet, choose to be in charge of the family’s finances, so you know all the incomings and outgoings of all the money that you have as a family.
I believe every woman should have some financial independence. Have your husband contribute a sum of his salary to your own savings account. You can put this money into investments, such as fixed deposits, unit shares or shares, so that the money can grow. If you have marital property, have it placed under a joint name or your name, to have you protected, Make sure you have a health plan, and start planning for your retirement (such as through EPF.)
I would also like to bring up the issue of financial abuse. If your husband is very controlling, threatens with money or takes huge loans or many credit cards that you don’t know about- these are red flags, and you should look into this further. Talk to a trusted friend or seek professional help, as this can escalate very quickly and can be very damaging.
Lastly, are the areas that we all don’t want to think about – the possibility that your marriage might end in divorce, or that your husband might suddenly pass away. These are realities that you need to prepare for. For example, if the marriage is breaking down, you might not have access to your husbands accounts or he might freeze the credit cards. If your husband suddenly passes away, his bank account will be frozen. Have a will, and make sure you are protected in the will. If you are a Muslim, make sure you understand the Faraid rules, because it affects women differently.
I’m interested in the W Vault. Do you store passwords across banking and even social media accounts? Do you also help to recommend investment options, or provide advice on growing assets?
The pre-populated categories under Assets and Liabilities do not require your passwords. What you choose to upload and keep within W Vault is up to you, and its all encrypted to prevent direct access to the information without your own direct credentials. We partner with financial planners from FPAM, and are looking to add more partners like banks and investment houses soon, whom you can talk to in the event you need such advice. We do currently have a network of experts if you are an existing W Vault user-Â you will get free micro consults to help you figure out the necessary steps on how to plan better.
I’m a mother and running a business. Do you have any helpful resources or tips for female entrepreneurs?
Rejina: It would be helpful if you could share with us what type of business you run, but generally social media is a great way to go. Know your target market and find out which social media platforms would be best to reach out to. We are no media experts, but we find that trying different things is very helpful.
There are plenty of women business groups that can be found on Facebook as well as online, but once again, it depends on what kind of business you have. I have signed up for a few women-focused tech accelerators like the AWS x Tigerhall, which allowed me to access the AWS Women Founders group, based in Malaysia. LinkedIn has been a considerable resource as well, and connecting to like-minded founders and businesses are very handy. In terms of books, I would recommend Hooked by Nir Eyal, Startup CEO by Matt Blumberg and The Lean Startup by Eric Ries.
Sherry: It is also very useful to connect with communities that are in similar businesses. The best learning we have had was from our peers from the tech start-up world. We were lucky that there are many community groups or accelerator programmes, where you get to network and share ideas. Talking to people who are doing something similar to you will provide great insights – from where to find human resources, funding issues, technical issues (e.g. how to design the technology), and so on. Some friends we’ve made there remain some of our most important sounding boards when we are planning new things for the company.
I personally do [also] love biographies of people who have made a big impact in the world. The latest book I read was a biography on Steve Jobs. It’s great, because we see him as this great iconic person, but really, he [was] just a normal person with his challenges and his insecurities. But the story of how he kept pushing forward through all that, and his dedication and belief in what he was doing – that, I find so inspirational and motivating. Remember, Apple was once a company with two young men working out of their mum’s garage!
[*The contents above have been edited slightly for clarity and brevity.]
We trust this has been helpful to you, #makchicmumsquad – and we hope to see more women gaining better access to the financial knowledge and confidence needed to secure a more financially-sound future.
For more information on Wahine Capital and W Vault, please refer to their website or Instagram page.Â
