Have you ever heard of the old adage “do something for 21 days and it becomes a habit”? Whether it takes 21 days or 100 days, establishing good habits is extremely important for your well being.
Successful women don’t do anything just once — they set rules and establish good habits. Rather, they set rituals for themselves that they follow daily, like practicing gratitude, eating well, meditating, and exercising daily. And now these women also adopting a far more important habit: investing.
To further our research into investing like a successful woman, we’re taking notes from tennis superstar, Venus Williams. In her own words, here’s how to live the life you want, “Get in control of your money. When you’re in control of your money, you have options. You have options to live the life that you want; you have confidence because you realize you have options.”
Williams points out that it’s all about having a choice, and that’s super important. “Money allows you to be in control of yourself, control of your family, control of your future, and that’s very important for women because we really, actually, determine where this world goes.” The unfortunate part about that this is, women are making more money and are more powerful than ever before, but we are still behind when it comes to investing and financial planning. This is because women think they need to be an expert and they need to be wealthy before they start investing. “That’s just plain false,” says Williams. The truth is that you can start investing with as little as little or as much as you want and thanks to the power of compounding, your money will grow.
But where to begin? Whether you’ve been reading up on investing or you’re just beginning to think about it, here is some advice for investing like a successful woman.
Don’t Let Fear Hold You Back
I know what you’re thinking: if money is so precious, why potentially gamble it away? First, investing isn’t gambling, and no one has lost all of their money just because they had a diversified portfolio. Need proof?
Let’s look at the numbers: If you’re a woman making $85,000 a year and put 20% of that into a savings account each year, you’ll have $1.5 million after 40 years. A nice chunk of change, sure, until you think about how much you would have had if you invested that money instead. With a diversified portfolio (which Ellevest recommends), you could have an additional $1 million or more in that same amount of time even with market fluctuations. That’s an additional $100 a day that you’re missing out on by not investing your money!
“It can build your wealth….not by a little, but by enough to make a real difference in your life,” says Krawcheck. To further our research into the money habits of successful women, we looked at the numbers: Let’s say you’re earning $85,000 a year, growing in line with women’s salary curves, saving 20% of that annually (as personal finance experts recommend), and putting that money in the bank — after 40 years, you will have saved $1.5 million.
- If you instead invest that same amount, in a diversified investment portfolio, depending on markets, in 40 years you can have another $1 million, or $1.7 million, or more. Ellevest calculated this using up markets and down markets, and you end up with these amounts the majority of the time.
“That’s life-changing,” says Sallie Krawcheck, co-founder, and CEO of Ellevest a digital investment platform for women. Oh, and those guys in suits? Turns out, women are better at investing than they are. There’s tons of research to prove it. In face, the market has delivered, on average, a 9.5% return annually since 1928. So, that means if you plop your money in an index fund that mimics the market, you’re practically guaranteed a nice return — especially if you hold tight through day-to-day or month-to-month market fluctuations — and at Ellevest, they’re not about beating the market — they are all about helping you reach your goals.
How to Start Investing
Here’s our take on it: First, find a firm that’s a fiduciary (which means they are obligated to put your interests before its own), run by experienced professionals. This sounds obvious… shouldn’t all financial advisors be fiduciaries? Nope. Turn out, not all financial advisors are fiduciaries.
Ellevest, a digital investment platform made for women by women, however, is a fiduciary and their goal (24/7/365) is making investing a better experience for you. It’s that simple. “This isn’t something we say because it sounds warm and fuzzy; we say it because we’re a fiduciary,” says Krawcheck.
If you aren’t sure where to even start, follow these two steps. First, figure out a reasonable amount of money to invest. Krawcheck recommends this ratio: 50% for needs/30% for wants/20% for investing, but it’s not a one size fits all thing. Do what works for you. “Invest some percent of every paycheck, but get yourself in that habit of investing,” says Krawcheck.
Next, figure out what to invest towards first. Need help? Ellevest‘s team can guide you through every step of putting your financial plan together, and it only takes a few minutes.
Think that that $100 a day that you’re missing out on by not investing isn’t such a big deal? Think again. Studies show that money is our #1 source of stress. The more we have, the better we feel, no matter how not materialistic we are.
“When women are financially stronger, it’s not just good for them, it’s good for their families, it puts money into the economy, the market — it’s good for everyone,” says Krawcheck.
Just think of all you can accomplish with a little extra set aside for emergencies, epic vacations, and whatever else you can possibly imagine. Instead of stretching every last dollar you have or relying on someone for financial support, on top of everything else that’s stressing you out in life, investing lets your money work for you. Put in however much you want, understand the way your portfolio works, and pat yourself on the back for doing Future You a solid.
Ready to invest? Ellevest has no minimum so you can start investing with as little, or as much as you like.
Take 10 minutes and make your power move today to get your complimentary financial plan from Ellevest today. You can save your Ellevest plan, come back to it, adjust it, or share it, whether you invest with Ellevest or not.