#WomenInvested checklist: 5 questions to ask for 2023

2022 WAS A PARTICULARLY TOUGH YEAR for investors, with markets declining and inflation and interest rates rising. “But for women, who historically have saved less for retirement as a result of career breaks and other factors, these shifts could have a significant impact,” says Ninon Marapachi, head of asset management relationships in the Investment Solutions Group at Bank of America. Now is a good time to see where you stand and consider any necessary adjustments, she adds.

Below, Marapachi and other Merrill and Bank of America women leaders offer insights to help you stay on track in the coming year. If you work with an advisor, she or he can help you develop a plan that aligns with your personal goals, risk tolerance and timelines.

1. The markets shrank my retirement portfolio last year. How can I play catch up?

“It can be especially disconcerting to see volatility eat away at your investments when saving for retirement is your top long-term goal,” says Marapachi. To check whether you’ve fallen behind, revisit when you want to retire and the kind of lifestyle you envision. Then use a retirement calculator or work with an advisor to determine how much to save, keeping the impact of inflation in mind. Next, ask yourself whether your current asset allocation — the mix of stocks, fixed income, alternative investments and cash in your retirement portfolio — can realistically help to generate the savings you need given today’s market conditions and the outlook for the coming year, she says.

If you find you need to play catch up, commit yourself to saving more. One piece of good news for 2023: The amounts you can save tax-free in your eligible retirement accounts have been adjusted upward.¹

2. What might rising interest rates mean for my finances?

Nearly half of women cite being debt-free as the hallmark of financial independence.² But with today’s rising interest rates, paying off debt is becoming tougher, especially if you have loans with variable interest rates. “Start by paying off any credit card balances, since they generally carry the highest interest rates,” says April Schneider, head of Wealth Management Banking and Lending at Bank of America. If you hope to buy a home, don’t be put off by today’s higher mortgage rates, she adds. Making a larger down payment will get you better terms. And an adjustable-rate mortgage with a low interest rate for the first five to 10 years may make sense for some home buyers. “You can always refinance when interest rates are lower,” she adds.

When it comes to investing, rising interest rates could provide you with an opportunity to find potential income through bonds, adds Marapachi. “Ask your advisor to review your allocation to fixed income.”

3. Are there ways to minimize the impact of future volatility on my financial goals?

It helps to take the long view, says Anna Snider, head of due diligence for the Chief Investment Office, Merrill and Bank of America Private Bank. Over the long term, diversified investors who are disciplined in maintaining their asset allocations should realize better returns than those who try to time the market, she believes. The good news is that women tend to be patient investors, resisting the urge to buy and sell frequently. As a result, their portfolios outperform men’s by an average of anywhere from 0.4% to 1.8% annually.^{3, 4}

Still, holding firm can be tough, Snider acknowledges. “Understand that stocks will go up and down and gear your portfolio toward the level of risk you’re willing to take,” she says. As you look to 2023, you may want to review your asset allocation with a financial advisor and consider whether it aligns well with your current tolerance for risk, as well as current market conditions.

4. Can I invest in a way that supports the issues I care about, like the environment and women’s equality?

“Women are having important conversations with their advisors about whether they can choose investments that reflect their values and still receive competitive financial returns,” says Sarah Norman, head of ESG Thought Leadership for the Chief Investment Office, Merrill and Bank of America Private Bank. The pandemic, social equity movement and climate change have sparked even more interest, she adds.

Getting started with sustainable investing doesn’t have to be all-or-nothing. “It’s a journey,” says Norman. “You can dip your toe in the water and transition more of your portfolio over time,” investing in public and private market investment solutions that focus on various areas of sustainability or individual companies whose practices are sustainable. And you don’t have to sacrifice returns, she adds. Companies that incorporate environmental, social and governance (ESG) factors into their decision-making have the potential to deliver competitive returns because they’re focused on creating lasting value. “Those that emphasize inclusion and diversity in their workforce, for example, are often better at identifying trends and delivering products and services to a wider customer base,”⁵ says Norman.

5. What can I do to earn and invest more next year?

Women favored a pay increase at work over additional time off by 61% to 39% in a recent Merrill survey.² Yet many find it tough to ask for more money, says Merrill National Client Experience Executive Adrienne Hughes. “Before sitting down with your manager, Hughes suggests documenting your accomplishments as much as possible. Include employee networks or affinity groups and activities outside of work, such as leadership roles in community organizations. To quell your nerves, practice for the conversation with a friend or spouse. If a sizable raise isn’t attainable this year, come up with a plan outlining future responsibilities and performance that could result in higher pay.

Earning more can help you save more and secure your entire family’s future, says Hughes, but the benefits don’t stop there: “As women earn more, they are opening doors for other women to receive higher salaries and achieve greater financial security.”