Women and Wealth

By Charles McLean

Women and Wealth, by Charles McLean was created to help women become confident in the common and uncommon issues they may face throughout their investment life cycle. Learn portfolio management strategies often used during volatile market cycles and asset positioning strategies that may be utilized in the event of lawsuit, death of a spouse, or divorce. Read about strategies on how best to manage assets of elderly parents or disabled family members. Discover different ways to plan for your children's education and get introduced to estate planning techniques that may help preserve your children's inheritance. Gain a basic understanding of executive compensation packages utilized by publicly and privately held corporations. Finally, read about what to look for in a Wealth Advisor and how to find one that will help guide you down a path to success.

• Language: English
• Publisher: BookBaby
• Release date: Aug 21, 2018
• ISBN: 9781543944549

Book preview

Advisor

Introduction

It is said that over 60% of this country’s wealth is controlled by women. It is estimated 70% of inherited wealth over the next two generations will pass to women. One reason, historically women typically outlive their male spouses. Another, more women are building wealth of their own, separate and apart from their male spouses.

According to a recent study done by shurwest.com, Financial Facts for Women’s History Month, women represent more than 40% of all Americans with gross investable assets above $600,000, 45% of American millionaires are women, 48% of estates worth more than five million are controlled by women, compared with 35% by men, and 60% of high-net-worth women have earned their own fortunes. With the trend for women-owned business revenue increasing at a rate 30% higher than the national average over the past ten years, there has not been a better opportunity in this country for aspiring women than there is right now. For this reason, knowing and understanding certain wealth building and asset management strategies may have a positive impact on the future and magnitude of your wealth.

As a wealth advisor, I have had the privilege of developing wealth strategies for many successful women over the years. In this book on Women and Wealth, we are going to explore those strategies as I share with you some of the most critical obstacles to building and managing your wealth. But first, let us look at a few of the most successful women in America and how they built their wealth:

Oprah Winfrey: If wealth was a measure of intelligence, elegance, grace, and personality, Oprah may be the wealthiest person on earth. Greatly respected by women and men alike across all races and nations, Oprah has become one of the most beloved television personalities in modern times. Best known for The Oprah Winfrey Show, the highest rated television show of its kind in history, Oprah has been dubbed The Queen of All Media. She is the greatest black philanthropist in American history, and currently North America’s first and only African American multi-billionaire.

Carolyn Rafaelian: Carolyn Rafaelian’s father, Ralph Rafaelian, started a jewelry factory in 1966. Struggling to compete with the cheaper brands coming from Asia in the 1980’s, Ralph Rafaelian would turn to his most creative designer for help, his daughter Carolyn. Carolyn’s designs for her father’s jewelry resulted in a sales boom that would ultimately save the company from its financial demise when she was only 22. Carolyn married at the age of 23 and had her first child, Alex, at age 25. Less than two years later after the birth of her second child, Ani, Carolyn began developing her own line of jewelry. Soon after, she founded the company, Alex and Ani, which is famously known for bangle charm bracelets. Today at the young age of 50, Carolyn is known as the Bangle Billionaire.

Sheryl Sandburg: Sheryl Sandburg graduated from Harvard University in 1991, Summa Cum Laude Phi Beta Kapa with a bachelor’s degree in Economics and was awarded the John H. Williams Prize for the top graduating student in Economics. She later earned her MBA with highest distinction from Harvard Business School in 1995. From 1996 until 2001, she served as Chief-of-Staff for Larry Summers, United States Secretary of the Treasury under President Bill Clinton. Sandra was the first female elected to Facebook’s Board of Directors, and currently serves as the company’s Chief Operating Officer (COO). She is the founder of LeanIn.org, the author of Lean In: Women, Work, and the Will to Lead and was recognized in 2012 by Time magazine as one of the top 100 most influential women in the world.

These are truly some of the most successful women in America. While I have not had the privilege of knowing any of them personally, I am privileged to have worked with many successful women while serving as their wealth advisor. In this book, Women and Wealth, I will share with you some of the wealth building and asset managing strategies implemented by my own clients over the years. These strategies have played an important role in the effective management of their wealth.

You may never reach the wealth levels of an Oprah Winfrey or Sheryl Sandburg. But if you work smart, follow your passion, keep competent advisors in your enter circle, and develop a disciplined systematic approach to investing and managing your assets, chances are you will do very well in your lifetime.

One final word before we start. It is said ignorance leads to suspicion, suspicion to fear. The most challenging obstacle to obtaining, growing, and preserving wealth can be fear. Women and Wealth, by Charles McLean, is a wealth management guide designed to enhance competence and confidence in the common and uncommon issues women may face throughout their investment life cycle. The information contained within is for educational purposes only and should not be taken or considered legal, tax, or investment advice. Advice of this nature should come only from the professionals that know your situation best.

CHAPTER ONE

Investment Planning

Have you ever gone sailing? If not, I recommend you give it a whirl at least once in your lifetime. For those of you unfamiliar with how a sailboat operates, allow me to give a brief explanation. A sailboat is powered by the wind as it blows into sails and controlled by a rudder mounted to the bottom of the boat. As the sails capture the energy of the wind and give the boat power and thrust, the rudder guides the boat in the desired direction. Without the rudder, the boat goes wherever the wind blows it. A sailboat without a rudder could end up in a bad place.

Some of you are thinking, What does this have to do with investment planning?. I suggest to you an investment plan is to an investor, what a rudder is to a sailboat. An investor with no plan to guide the investment process could end up somewhere they do not want to be, or worse.

Developing an investment plan starts with a good understanding of the fundamental components of investing. In this chapter, we will talk about money and its function in the investment process as well as understanding Personal Investment Policy Statement and how to use it effectively. We will also spend time describing characteristics of individual and collective investments such as stocks, bonds, and mutual funds. Last, we will identify two types of investment accounts, brokerage and managed and explain the difference between the two.

Let us begin with a conversation about money. Money is currency used to purchase goods and services. While money is certainly part of the equation when determining your wealth, it does not represent comprehensive wealth. You work for money. If you own a business, you operate that business to generate money.

As you accumulate wealth in the form of money, you should have a plan in place to manage that money. If not, your money can begin to deteriorate even if you do not spend it. For example, you and your sister go shopping with $100 each to spend. Assume the two of you visit Alex & Ani; and your sister finds a bangle charm bracelet she cannot live without. The bracelet cost exactly $100 so your sister makes the purchase. You, on the other hand, take your $100 back home and place it under a mattress.

Three years later, you retrieve the $100 from beneath the mattress and go back to Alex & Ani. Looking around, you see a bangle charm bracelet identical to the one your sister purchased three years earlier and decide to purchase it. To your surprise, the bracelet has risen in price to $109. You no longer have enough money to buy it. What happened? First, the bracelet increased in price due to something we call inflation. Second, your money sat stagnate for three years under the mattress having zero growth. The effect of zero growth is loss of purchasing power…your money deteriorated.

Inflation can have a negative effect on money. One way to hedge against inflation and keep the value of money growing as the cost of goods and services rise is to invest your money. Had you placed your $100 in an appropriate short-term investment such as a United States federal bond instead of under the mattress, you may have had enough money to purchase the bracelet at the new inflated cost of $109.

When we think about investing, there are different ways