THE MONEYWISE WOMAN
Declare Your Financial Independence!
 Michele Faulkner
Demographic and cultural shifts mean more money power for women, according to financial advisor Michele Faulkner.

"Womens' educational level is at an all time high; in fact, more women than men are attending college now. Women increasingly are reaching upper management levels in the corporate world. And more and more women are owning their own businesses," she said.

Ms. Faulkner, a member of the SMS Board of Governors and mother of Britton '01, made her remarks at a seminar held during reunion weekend. More than 25 alumnae of all ages discovered that they have what it takes to manage their financial affairs-and that there are many advantages to doing so.

"Financial planning is really about women taking charge of their lives," Ms. Faulkner explained. "It's really about caring for their children, participating in their community, supporting the causes they are passionate about, and ensuring that they're able to enjoy the fruits of their labor."

Women can't afford not to take charge, she added. Most are likely to live longer than men and to have a non- linear career path due to child or parent care responsibilities. That means a longer retirement period to fund from a shorter span of income-producing work. In addition, women typically are single when they die. Estate planning is essential if they want to preserve and transfer wealth.







Michele Faulkner is an associate vice president with Neal and Nickel Wealth Management of Wachovia Securities in Kilmarnock, Virginia.




Attendees also learned that:

  It's important to understand risk. Return on investment increases in proportion to risk. A higher-risk investment like international stocks has a higher rate of return, while a lower-risk investment like a money market has a lower rate of return. Knowing when and how you plan to use your invested funds can guide you to an appropriate level of risk.

  Inflation also is risky. Conservative investors often say they stick to low-risk, low-return financial options because they "know the money will always be there." But will it? At a 4% rate of inflation, you'd need $26,700 in 2027 to have the same purchasing power that $10,000 has today.

  Starting early pays off. It's simple: The sooner you start saving for retirement, the sooner you can retire. Compare the individual who puts $2,000 away each year from age 55 to age 65 with the individual who saves the same amount annually from age 25 to age 65. Assuming an 8% rate of return, the 10-year investor ends up with $28,973 (a gain of $8,973), while the 40-year investor has $518,113 in her account (a gain of $438,113).

  Diversification is essential. The market is more like a see-saw than a pendulum: usually, when one type of asset is down (like stocks), another is up (like bonds). The same often is true of industries, and of companies within industries. Spreading your investments across asset classes, among industrial sectors, and over a variety of corporations is an easy way to reduce risk and increase the likelihood of a favorable return.

  Philanthropy saves money. Without careful planning, taxes take a huge bite out of estates. Compare hotelier Conrad Hilton, whose heirs lost 53% of the value of his estate, with author William Danforth, whose heirs inherited 98% of his. Philanthropy gave the latter tax breaks. Charitable remainder trusts of various kinds, charitable lead trusts, and family foundations are just a few of the mechanisms you can use to preserve wealth while doing good.

The opportunity to make a difference is a powerful motivator for women philanthropists, Ms. Faulkner said. "Men usually are inspired to give because of the power their gift will signal, the influence it may produce, or the recognition they will receive," she said. "For example, men who make a significant gift to an organization often follow up by joining the governing board; many women do the reverse."

When women give to an organization they believe in, their philanthropy can be extremely powerful in its own right. A gift by Sophia Smith established the college that bears her name. More than 100 years later, Smith is one of the world's most prominent and best known women's colleges.