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Money Maven Blog by Sheryl Sutherland, Authorised Financial Adviser and Director of The Financial Strategies Group

Recommended Reading

Recommended Reading by Sheryl Sutherland: Girls Just Want to Have Fund$ - Every Women’s Guide to Financial Independence, Money, Money, Money Ain't it Funny - How to Wire your Brain for Wealth, and Smart Money - How to structure your New Zealand business or investments and pay less tax.

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Tuesday, 7 April 2009


As the French say everything changes, everything remains the same. A recent headline in the Sunday Star Times caught my eye “DIVORCE LAW: MOTHER’S DON’T GET A FAIR DEAL.” Law Professor Mark Henaghan says that stay at home mothers left with little earning power when their marriages break up are not getting a fair deal from the courts.

As one English judge famously put it: “The cock bird can feather his nest precisely because he does not have to spend all his time sitting on it.”

Henaghan explains; “If one party goes on earning $500,000 a year and the other is on a benefit then even if you’ve got 50% of the property you’re still quite a long way behind the eight ball, in terms of economic equality.

After divorce women come off second best financially. A woman’s income drops 24% on average; a man’s drops 6%.

This is simply one of the the areas where women’s economic power is repressed. For more on this read Girls Just Want to Have Fund$.

Musings and Amusings

I am certainly amused. It appears that the myriad of studies advising women not to drink for fear of increasing the risk of getting cancer, especially breast cancer, are based on questionable research.

The leading study was one created by one Naomi Allen of Oxford University. There are, it appears, several flaws in her results.

Firstly, her study is an observational one; that is it is based on self reports about the drinking habits of women. Thus it relies on women’s recollections of their drinking habits.

Secondly the study is weakest kind and not in any way close to a randomised controlled trial. None of the reports were checked thus the study can’t verify its data is accurate.

Thirdly consider the results; cancer in non drinking subjects was 5.7%, and those women who had at least one drink a day and up to 14 drinks a week, 5.3%. The teetotallers had a higher incidence of cancer than the drinkers! Even women who had 15 or more drinks a week had a cancer incidence of 5.8%! These figures are hardly statistically significant.

I’ll raise a glass to that!


Why when talented successful women flourish are there those who are ready, to pull them down. Are they a perceived as a threat? Or is it simply envy which motivates the detractors. The term "successful woman," it seems to me embody a conundrum; success may lead to exclusion by peers; and if success is eschewed ones own personal and professional fulfilment is put at risk.

Finance and Investments

The fund promised high and unwavering annual returns, but you had to know someone to get in on it. And that was really all it took to attract credulous investments, that and the sterling reputation of the banker behind it, a financier revered in privileged circles.

“I’ve looked into it” is how one investor reassured a friend who wondered what would happened if the fund should fail. “Name up everywhere, immense resources, high connections, government influence – can’t be done.”

It’s not Bernard L. Madoff’s fund, it’s the one created – and wrecked – by Mr Merdle, the legendary London Banker who brings masses of wealthy, well-meaning people to ruin in Charles Dicken’s classic “Little Dorrit.”

The picture Dickens drew is one which has been repeated throughout history. I am guessing that you gentle reader don’t want to appear in this scenario. Here are some suggestions for you which should make you pause before you jump in.

Generally Accepted Investment Principles
1. Investors should establish an emergency fund invested in short-term safe assets and not held in retirement accounts.

2. The percentage of assets invested in stocks should decline as an investor ages. A popular rule of thumb is to subtract a person’s age from 100 and invest that percentage of total assets in stocks.

3. The percentage of assets invested in stocks should increase with wealth because wealthy individuals can generally tolerate greater risk.

4. All investors should diversify their portfolios across asset classes, and the equity portion should be well-diversified across industries and companies.

5. The optimal asset mix might differ from standard recommendations because of risk preferences.

6. Time horizon, risk tolerance, income stability and other factors influence asset allocation.

The term ‘Generally Accepted Investment Principles’ derives from the term ‘Generally Accepted Accounting Principles’ or GAAP, which refers to accounting standards or rules used in preparing financial statements.

Who’s Counting?

I am counting – but only to five. Here are five simple rules for asset allocation (The jargon for not putting all your eggs/investments in one basket).

Rule 1: If you need money in the next 12 months keep it on term deposit or in a savings account.

Rule 2: If you need money in the next 5 years put it in a safe investment like government stock or corporate bonds. If you can’t do this directly use a managed fund.

Rule 3: Any money you don’t need for the next 5+ years should be invested in the share market. Shares, on average, have returned over 10% annually from 1926 to 2007 so try not be frightened.

Rule 4: Always own shares. Over the long term equities are the best hedge against inflation.

How much should I invest in shares you say - use the following guide from William Bernstein’s The Intelligent Asset Allocator:

For example if you can tolerate losing 35% of your portfolio in the course of earning higher returns, 80% of your portfolio should be invested in stocks; 30% loss = an exposure of 70% to shares; 25% loss = an exposure of 60% to shares; 20% loss = an exposure of 50% to shares; 15% loss = an exposure of 40% to shares; 10% loss = an exposure of 30% to shares; 5% loss = an exposure of 20% to shares; 0% loss = an exposure of 10% to shares.

Rule 5: Don’t hide in a cave (even if your gut is instructing you to do so) until someone sounds the all clear on the economy – it won't happen and you’ll miss out on the profits a recovery will bring.

Everyday Money

According to economists we are all supposed to be rational about money; to see it as “fungible” a medium which we can use to exchange for any commodity we desire. Each of us has a different relationship with money, the ways we describe money are incredibly varied. We say “money talks,” but it is the way we talk about money which is most revealing.

When we talk about money we usually refer to it as dirty stuff, the root of all evil. Women don’t discuss money; cash is hard, women are soft. Women can be appalled when they have to ask for money, that’s the sort of thing prostitutes do – exchange money up front for a service to be rendered in the future. But money does count and is important to us.

Money is the stuff of life. It is the measure of all the services you enjoy. It is money that changes hands in nearly all transactions, the end result of the selling or value process. Money is your friend. It signals the worth of your abilities; money is power, marking you as a person of substance. Make peace with money by changing the language in your head.

More about this in Girls Just Want to Have Fund$ and more about our irrationality in Money, Money, Money Ain’t it Funny.