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Investing for Women: How to Get Started

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There’s a lot out there about how important it is for women to invest — and why some women still feel reluctant to move forward with investing. The good news is that there are lots of good reasons investing for women is a good idea. If you’re trying to figure out whether investing is the right move for you, then read on to find out more about women and investing. After all, anyone can benefit from investing.

Why Should Women Invest?

Only about 26% of women invest in the stock market, according to a recent S&P Global survey. Additionally, a BlackRock survey found that women keep about 71% of their assets in cash, as compared to men, who have about 60% of their assets in cash. According to the Economic Policy Institute, this disparity could very well contribute to some of the concerns that women are more likely to live in poverty as they age.

If you’re one of the women reluctant to invest, there are some good reasons to start investing:

  • Investing helps you build wealth now and in the future.
  • Investing contributes to your financial independence, which can be helpful in the event you lose your partner.
  • Women might actually be better investors than men, according to some studies.

In general, we talk a lot about investing for women and why it’s important to get started, but it’s also important to look at the how. For most of us (I’ve been investing for more than 15 years), it’s really about just getting started. And many of the things to consider aren’t actually tied to gender identity at all.

How to Invest as a Woman

When looking at investing for women, much of what you can do is very similar to what men can do. But according to some research, including a literature review by Starling Bank, part of the issue is that financial advice given to women is aimed at budgeting and couponing and telling them that they are excessive spenders. Men, on the other hand, are more likely to be told to invest.

If you’re a woman (or a man) and interested in investing, here are some things to consider as you get started.

1. When Should You Start Investing?

Start investing as soon as possible. The good news is that there are a number of apps available that can help you get started with pocket change.

  • Microsavings apps: Acorns and Stash both use roundups to allow you to start investing with a few dollars.
  • Robo Advisors: Betterment, Wealthfront and Ellevest allow you to begin making regular investments without the need to pick stocks.

By using these tools, it’s possible to begin investing with a small amount of money.

Start today. This is important because the earlier you start, the longer you have to take advantage of compounding returns and grow your wealth more effectively.

2. Budget Allocation

One of the best ways to ensure that you invest for the long haul is to make investing a priority. I set aside the same amount of money each month for my various investing goals. It’s part of my ongoing spending plan.

Take a look at your monthly income and expenses. Then look for a way to free up some cash to go toward investing. Even if it’s just $5 per week, start the habit. As you begin to see your portfolio grow, look for more ways to prioritize investing.

Over time, as your finances improve and you see results, allocate more of your budget toward investing, and you’ll watch your net worth increase.

Find out more>>> How to Build a Budget.

3. Learn Investing Basics

One of the things that hold some women back from investing is the fact that it can seem overwhelming. Maybe you don’t want to start with investing until you know more. This can slow you down.

I started investing by beginning with index funds. These investments cover a wide swath of the market without the need to choose individual stocks.

Just get started — with an index fund or something else — to begin investing for women and start growing your wealth while you learn more. As I’ve learned more over time, I’ve branched out a little bit, although most of my portfolio remains in index mutual funds and exchange-traded funds (ETFs).

4. Conservative vs. Aggressive Investment Strategies

One of the reasons women and investing can result in better performance, according to a Warwick Business School study, is that women are less likely to trade aggressively. This can be an advantage for long-term investing.

However, that doesn’t mean you can’t be a little more aggressive in your asset allocation. There are different types of aggressiveness when you invest. For example, if you frequently trade stocks (aggressively), you could have more losses. You have to worry about timing and, sometimes, trading fees.

On the other hand, you might want to consider a little more aggressiveness in your asset allocation. In general, heavily investing in stocks is considered more aggressive than investing in bonds or cash. Take a look at how you handle risk financially and emotionally to determine how to construct your portfolio.

I have a reasonably high-risk tolerance since I am relatively young and have time to recover from mistakes. Most of my portfolio is constructed of stock funds, although I do have some bond funds, real estate investment trusts, and cryptocurrencies.

However, if you have a lower risk tolerance, you may be more comfortable focusing on dividend and income investments. Consider consulting with an investment professional, such as one from Facet Wealth, to determine what type of portfolio works best for you.

5. Fees and Taxes

As you start investing, it’s important to understand how fees and taxes can cut into your long-term returns. Recently, many brokers followed the lead of Robinhood and cut their trading commissions. As a result, you can open a brokerage account and get access to low-cost trading.

When investing in mutual funds and ETFs, it’s important to look at the expense ratios. These are basically administrative costs. In recent years, expense ratios have dropped to a point where it’s possible to find plenty of index mutual funds and ETFs with less than 0.20% ratios. You should also look at the fees charged by robo advisors and others to see if the annual management costs are eating too far into your returns.

And don’t forget about taxes. If you have access to a tax-advantaged retirement account like a 401(k) or IRA, using it can be a good way to increase your tax efficiency and get more benefit from each dollar invested. However, pay attention to how taxes are eventually levied. Depending on your situation, it could make sense to pay taxes today and put your money into a Roth IRA or Roth 401(k). Talk to a financial professional to help you compare the potential benefits of different accounts.

Finally, pay attention to long-term and short-term gains when dealing with taxable investment accounts. Long-term gains are generally taxed at a lower rate, and that can make a difference in the long run.

6. Choose the Right Investing Platform for You

As you start investing, pay attention to different platforms, and look for one that fits you. Think about how often you plan to trade, what types of assets and investments you want access to, and the fees that you might be charged. Also, consider features like tax-loss harvesting and rebalancing.

Leading Women in Investing

Finally, as you set up your own portfolio, it makes sense to gain inspiration from some of the top women for investing. Here are five women to look up to and learn about:

  • Abigail Johnson: CEO of Fidelity Investments, chairman of Fidelity International, and one of the wealthiest woman investors in the world.
  • Abby Joseph Cohen: Portfolio strategist who served in various capacities as one of the most notable women in investment banking, as well as working as a Federal Reserve Board economist.
  • Geraldine Weiss: Investment advisor and founder of a private investment newsletter. She is notable as someone who hid her gender after no one would hire a woman investment advisor. After attaining a track record of success, she revealed her gender.
  • Lubna S. Olayan: CEO of Olayan Financing Company and one of the most prominent businesswomen in Saudi Arabia.
  • Muriel Siebert: Founder of the only female-owned brokerage on the New York Stock Exchange even though she didn’t graduate from college. She faced early difficulties as a woman trying to get registered with the SEC because, at the time, she needed men to sponsor her.

Start Investing Today

While there have been challenges for women for investing, today, it’s easier than ever to get started. No matter your gender, you can benefit from getting started as an investor. There are lots of options available, from online investing to hedge funds, to active financial advisors. The most important part is to invest today and focus on a long-term investing strategy.

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