How to Get Started Investing as a Woman

17 Apr How to Get Started Investing as a Woman

Posted at 14:24h in Pensions and Retirement, Saving and Investing by Admin

There’s a lot of discussion about the gaps that exist for women. While some of these are arbitrary, like thigh gaps (forget about them; they’re not important) and a gap in marrying age (also forget about it; get married when you want), some gaps need to be talked about more. Specifically, the gap between women and men when it comes to investing.

Women don’t invest as much as men, and that’s an issue.

According to Ellevest, an investment site that was made by women for women, 71% of all female’s assets are cash, which means they’re not invested. According to statistics, women don’t invest as often as men do; and even when women do invest, they typically wait until they’re older than men are.

To be a successful investor, you don’t need to know everything about the investing market. A lot of women feel like they don’t know enough to be able to invest well, so they hold off until they’re more financially stable or until they believe they can risk losing money. There are actually plenty of ways to make money investing with the money you find in your couch cushions!

Why Should Every Woman Invest?

Forty-one percent of women think that their money would be better spent invested. Why is investing an important part of everybody’s personal finance?

Financial Equality

An important idea in our society today is that women can be financially equal to men as well as independent. With the odds against women including things like the pink tax and the gender pay gap, women can use investing to help boost their financial situations and to help themselves accumulate wealth at a level that’s much more common for men.

Reaching Financial Goals

There are plenty of reasons that women would need a substantial amount of money: saving up for emergencies, saving up for a big purchase (like a house or a car), going back to school, or saving up for their children to go to school. Investing is a great way to reach your financial goals, no matter their size.

Saving for Retirement

Women typically earn 83 cents to the dollar that men earn. Even if women save the same amount of money percentagewise as men, they won’t be saving the same amount of money as men can. Also keep in mind that women, on average, live longer than men, so saving for retirement is very important for every woman. While some companies offer 401(k)s that match savings plans, not everywhere does, so make sure to check with your place of employment to see what the best option is for you.

Why Can’t a Savings Account Be Enough?

Money that’s just sitting in an account (or in cash stuffed under your mattress) goes down in value over the years because of inflation, so instead of saving money, you’re actually losing money and not growing your savings at all.

Men list investing as a number one financial goal five times as much as women, which means that men are going to grow their savings exponentially throughout their lives while women are more commonly losing money in accounts. Women can earn more by investing compared to a savings account, even if they’re only investing small amounts.

Investing Like a Woman

There are several things that are unique to women that help make them good investors. Women tend to think about risks differently than men, and that leads to consistent growth throughout their lives. Women investors have less large swings in their portfolios, meaning that they don’t lose as much money as men do.

Studies show that women are:

45% less likely to deal with trade investments, which means that women have a 1% higher investment earnings per year compared to men.
Longer-term planners, which means that women pay more attention to specific growth goals instead of looking to make risky returns.
More likely to seek help when it comes to investing and finances. Sixty percent of men claim to be experts at investing, but that doesn’t mean that they are experts. Women are much more likely to ask for financial help from actual investing experts, which helps them grow easier.

With all of these things in mind, how do you, as a woman, form your investment strategy?

Create a Budget

Most financial experts reference a 50/30/20 idea when it comes to setting aside money for your budget. Fifty percent of your income should go to your needs, 30% should go to self-care, and 20% should be saved and/or invested.

When it comes to the 20% that should be saved or invested, how do you decide which one to do? This can be a tricky thing to think about when it comes to your personal finances, but the biggest thing to remember is to never invest more than you’re willing to lose. A return is never guaranteed no matter how good the market is. Once you’ve determined an amount, you can set up an automatic withdrawal to invest every month!

The Basics

While you don’t have to be an expert to invest, it helps to know the basics. Here are the different kinds of assets that you can invest in:

Stocks: These are all parts of a company that you can buy, so when a company does well, its stock prices also rise in value. These investments can give you high returns in the long run, but they tend to swing a lot more than short-term investments.
Bonds: These are also called fixed-income investments, and they’re very popular when it comes to conservative portfolios. They’re very stable, but they have a low return.
Money Market Accounts: These investments are handled by the bank where they put your money into different low-risk investments.
Real Estate: There are several investors who use the rise in property value to invest their money.
Crypto currencies: Things like Bitcoin are still growing and are predicted to stay stable as the years go by.

Investment Strategies: Conservative vs. Aggressive

Short-term goals are easily reached with conservative routes that are low risk with a low return. These are perfect if you’re looking to create an emergency fund or saving for a wedding.

If you’re trying to invest for a long-term goal, like a retirement plan, aggressive investment strategies are much better. They might swing more in short-term goals, but over time, these strategies trend upwards by 10% each year. If you have the time to wait, then aggressive strategies are perfect.

Choosing the Best Investment Platform

Since most people aren’t investment experts, it’s important to seek professional advice before starting to invest. While you need to do this, it’s also important to use caution when you trust someone with your money.