Women trust everything except investing. It’s time to change that.
Financial Confidence and Performance
A recent study by Merrill showed that women’s confidence in their financial matters matches or exceeds men’s confidence in most financial areas, but when it comes to investing, we greatly underestimate our abilities. Only 52 percent of women say they are confident in investing, compared to 68 percent of men. The study also indicates that not investing is the biggest financial regret among women. These statistics are particularly concerning when considering that women outperform their male counterparts when they do invest, according to a new study by Fidelity analyzing over 5 million clients over the past decade.
Overcoming Your Fear of Investing
Many women believe that money is one of those topics to be avoided in polite society, but if you want to take control of your financial life, overcoming your fear of money is essential. This is what this article addresses. We will first discuss the gap between financial confidence and performance, and what we can do to change that. Then we will explore actionable strategies to start investing at your own pace, whether that involves using fractional investing apps, investing in companies that mean something to you, buying real estate, or experimenting with investing in the world of cryptocurrencies. Finally, we will answer the most important question: why is it so crucial for women to invest now?
Getting Started with Investing
The first step to gaining financial confidence is simply starting to talk about money. This is not easy. Merrill’s study found, for example, that 61 percent of women would rather discuss their own death than money. Try creating your own trusted financial community, and use that community to leverage the experiences of other women and exchange advice openly. “The community also provides accountability throughout the process. You could even start an investment club with other women to discuss ideas and share research about potential funds or companies,” says Ella Gupta, personal finance ambassador for the Greenlight money app and author of Gen Z Money $ense: A Guide to Personal Finance and Investing. “Speak openly and ask questions about investing and personal finance more broadly to friends, family, employers, or financial experts,” says Lorna Sabia, head of retirement solutions and personal wealth at Bank of America. “Seek out advice and guidance, and ultimately create a plan for tougher financial times like investing. Reliable advice can be what you need to overcome decision paralysis and move forward.” Then, once you start talking, let your money flow as well.
Educate Yourself and Challenge Your Fears
You may be under the false impression that knowing about investing is entirely instinctive, and thus you must have been passed over by the investment fairy while distributing these natural talents. However, this is not the case. “Although investing may seem complicated, and it may have to be, new women investors can successfully start with an education-first approach,” says Sabia. “Whether through personal research, an online course, or seeking advice from experts, learn the fundamental principles of the market, including the risks and returns of stocks versus bonds,” says Ella Gupta, author of Gen Z Money $ense: A Guide to Personal Finance and Investing. To build her confidence in getting started, 32-year-old Mayan Bobylev from Texas began reading inspirational books about money, such as Smart Women Finish Rich by David Bach and I Will Teach You to Be Rich by Ramit Sethi. She also worked with a financial mindset coach who helped her reprogram limiting beliefs about money and investing. “I always knew that consumer debt was stupid,” says Bobylev, who is a mother of three. “But the amount of advice on avoiding debt has always been far greater than any moral advice on how to deal with investing.”
Getting Started
Small Actions Lead to Big Gains
Take the time to think and define what you hope to achieve in the end from investing, whether that’s quick returns or building wealth slowly over time. By setting clear goals, you will be able to establish a comprehensive investment strategy. “Once you determine the goal, break it down into smaller metrics and start,” says Sabia. “The idea that you need to have a lot of money to begin investing is not true. Start simply investing, even if it’s just $20.” Use any amount of money that you feel comfortable with to open an investment account initially, then create a plan for systematic contributions to add more to that account. “The more money you add, the more results you will see,” says Sabia. “The key here is regular and consistent contributions to your investment accounts, so you’re always making progress toward your goal.”
Utilize All Available Tools and Think Outside the Box
When starting your investment journey, it may be a good idea to begin with the employer-sponsored benefits, such as investing in 401(k) plans and Health Savings Accounts (HSAs). Both of these financial tools are great for starting to build wealth today that you can rely on in the future, according to Sabia. “Women should start early with savings plans and increase contributions to bolster resources over the long-term,” says Sabia. HSAs are a good option for this purpose because, unlike other mechanisms that must be used up before losing them, HSAs are portable and controllable, meaning you can start putting money in them now and use them for qualified healthcare expenses even into retirement.
Don’t Wait
Why the urgency? Because time is your greatest asset when it comes to investing and building wealth. “Compound interest – which Albert Einstein described as the eighth wonder of the world – is powerful, and time has a major impact on your nest egg,” says Gupta. “Investing may seem overwhelming, but once you take that first step, it gets easier.”
Even amidst the uncertainty brought on by a global pandemic, women across the country made investing a priority in 2020 and 2021. Jackie Alvarez, a travel marketing professional in Los Angeles, always knew she needed to invest, but she had only been contributing the minimum to her 401(k) accounts. When the effects of COVID impacted the travel industry, Alvarez transitioned to a more stable industry where she had the opportunity to start implementing her financial plans. She used the micro-investing app Stash to make her first investments, starting with just $25. “It was fun to start really watching the market and making decisions about where to invest,” she says. Her newfound confidence led to other financial discoveries. “It may sound a bit strange, but once I started there and saw how easy it was to access, investing in general became more achievable and increasing my contributions to my 401(k), boosting my investment in a separate mutual fund through my bank, and ramping up savings,” she says. She now contributes $100 a month to her Stash account, $200 to her J.P. Morgan account, and 12 percent of her salary to her 401(k) account.
For Catherine “Kitty” Kurt, a 63-year-old retired special education teacher from Wellesley, Massachusetts, the beginning wasn’t easy. “I was always a traditional homemaker with four kids at home, and I never worried about investing. My husband was really focused on his work
Source: https://www.realsimple.com/work-life/money/women-wealth
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