Take Control of Your Finances

You understand the importance of saving and investing, but sometimes more immediate needs can sidetrack even the best of intentions. A disciplined approach is needed to achieve your long-term goals and to have financial security when you retire.

It's all too easy to postpone saving for financial goals, such as retirement, when they are years or decades off in the future. But keep in mind the following when you're tempted to put off saving for your longer-term goals:

  • Put Yourself First - Whether it’s due to temporarily leaving the workforce to raise a family or to care for an elderly loved one, many women are financially penalized for putting the needs of others before their own. Women are more likely to cut back on hours of employment to meet family needs, and work interruptions can have significant financial consequences. For example, women’s contributions to Social Security cease when unemployed, ultimately reducing this benefit when they retire. Therefore, focus on taking care of yourself first and make saving a priority.
  • Don't Postpone Saving for Retirement - As a result of shorter careers, women have less time to accumulate a financial nest egg and save for retirement through a company-sponsored plan, such as a 401(k). Your ability to increase your retirement savings can be substantially enhanced by putting aside money for retirement now, rather than later, to reap the benefits of compounding.
  • Establish an Automatic Savings Plan - One way to pay yourself first and save for retirement is with an automatic savings program. With such a program, you invest a set amount of money each month by taking automatic withdrawals from your bank account. In doing so, you can take advantage of an investment strategy called dollar cost averaging, whereby you buy more shares when prices are low and less when prices are high. The chart below compares two different strategies. An investor achieved a lower average cost per share with dollar cost averaging and was able to purchase significantly more shares than the single investment strategy. In the long run, this can help an you generate additional wealth if share prices rise.
Dollar Cost Averaging Strategy¹: Investing $2,000 Per Month for One Year
1 $2,000 $17.00 117.65
2 $2,000 $15.00 133.33
3 $2,000 $16.00 125.00
4 $2,000 $13.00 153.85
5 $2,000 $10.00 200.00
6 $2,000 $9.00 222.22
7 $2,000 $10.00 200.00
8 $2,000 $11.00 181.82
9 $2,000 $12.00 166.67
10 $2,000 $11.00 181.82
11 $2,000 $12.00 166.67
12 $2,000 $14.00 142.86
Total $24,000   1991.88

Average Cost per Share
Total Annual Investment divided by Total Shares Purchased
$24,000 / 1991.88 = $12.05

  1. This hypothetical example shows how dollar cost averaging may work in a down market. It is for illustrative purposes only and does not reflect the actual performance of any investment product. This approach is not for everyone. Dollar cost averaging does not assure a profit and cannot guarantee against a loss in declining markets.

Action Steps

Working with a financial professional to develop an investment plan and sticking to it over time are essential to achieving your goals. He or she can also help you establish an automatic savings program so you can maintain a disciplined approach. We also offer a number of tools to supplement the advice from your financial professional. To learn more, call 800-MAINSTAY (624-6782).