A Beginner’s Guide to Investing

A Beginner's Guide to Investing

If you’re like most women, the extent of your investing—if you invest at all—is likely limited to what you save in an employer-sponsored retirement account. That’s because the idea of investing money into the markets can feel intimidating. In fact, 56% of millennial women have money to invest but aren’t doing so because of fear according to a recent SoFi study.

On the one hand, you’ve heard that it can be a great way to grow your money. On the other hand, the ups and downs of the markets may make you nervous about losing your money. On top of all that, how do you even start, even if you wanted to invest?

This can all feel overwhelming, so we’re here to help. And while there are risks, investing can also help you reach financial goals that you may have—and the sooner you get started, the more time your money will have to grow.

Ready to get started? Here’s what you should know.

Personalized Investment Plans | Why For Women?‎

Here’s the truth: There are a million and one “reasons” to put investing off: You’re expecting a raise. You aren’t sure if you know enough to get started. You think you don’t have enough. Retirement feels a hundred years away.

But there’s a single, even more, pressing reason why you should start ASAP (like, right now), $100 a day. $4 an hour. $3,000 a month.

That’s how much you could miss out on by waiting to invest.

“The reality is, women can’t afford to put off investing,” says Sallie Krawcheck, CEO and co-founder of Ellevest, a digital financial advisory for women.

“Here’s some math that doesn’t add up: Women retire with two-thirds as much money as men do, buuut we live 6–8 years longer.  And the longer we wait to get started, the further behind we get. So, if you think about the means to have more power, getting a raise is certainly one of them. Investing is another.”

Sign up for a free account with Ellevest today. Get started in minutes.

If you’re looking for how to open an account

First things first: open an account and ask yourself some questions like How much money do I want to invest?

There’s a common misperception that in order to invest, you need to first amass a large fortune. That’s not true. You can open accounts with $0—you won’t earn anything, but you can open the account.

And with as little as $1, you can start investing in exchange-traded funds, or ETFs through a digital financial advisory. All you need to do is open an account with a brokerage, which you can do online. Some popular choices are E*Trade, Ellevest, Charles Schwab, or Fidelity. Which type of account is right for you depends on your goals and income.

Sallie Krawcheck, whom I mentioned earlier, founded Ellevest with the specific goal of closing the investing gender gap. The company aims to serve women’s needs better than any other existing system by using an algorithm tailored specifically to women’s incomes and life cycles.

Sign up for a free account with Ellevest today. Get started in minutes.

If you’re looking for some motivation

Retirement. Ahhhh. First: Picture yourself when you retire. Get specific about it — what does your day look like? It can help with the planning process to visualize something tangible to shoot for.

Retirement looks different for everyone (if you even retire at all, that is). If you like the idea of spending your retirement years on the beach sipping Mai Tai’s, you gotta start saving (like now). Depending on your job situation, you may have a 401k, an IRA, a SEP IRA. And when it comes to retirement talk, this is tax code speak for the money you’re saving for retirement.

Sign up for a free account with Ellevest today. Get started in minutes.

If you’re wondering which account type is best for you

For most people, the decision is between an IRA and a 401(k). Both have tax advantages, but they’re different in some key ways. Here’s an in-depth explainer on what they are and how to decide which one’s best for you.

Then, once you’ve decided on either an IRA or a 401(k), you might find yourself with another decision to make: Roth or traditional? Or both? The difference here has to do with taxes and timing. For help deciding, check out the explainers here on Roth vs traditional IRAs and Roth vs traditional 401(k)s.

And if you’re self-employed, there’s a special type of IRA to consider: the SEP IRA. Here’s the breakdown on them and why they tend to be such good options for the self-employed.

Got a traditional, Roth, or SEP IRA that you need to roll over? Get started here.

If you’re trying to figure out how much you actually need to save

How much do I need? This answer is different for everyone.

Ellevest can help you answer this question, too. Their investing platform makes it really easy (dare I say — fun) to understand how much you need. All you do is enter your personal info into consideration — things like your gender, savings, income, and projected future income — and Ellevest gives you a plan designed to help you get where they think you’ll need to be. They also suggest how much you should put aside for retirement.  As a rule of thumb, many advisors recommend the 50/30/20 rule when it comes to how much you should budget for retirement. It’s a high-level, flexible budgeting framework that can help you control where your money’s going without having to count every penny.

Create a free financial plan with Ellevest. They’ll recommend a retirement goal number, down to the dollar.

If you aren’t sure how this whole 401(k) employer match thing works

Did someone say “free money?” Yep … it was your employer. If you have a 401(k) employer match available to you, it’s in your best interest to take full advantage of that. (aka max it out. Here’s how a 401k match works and why that’s the case.

Be a woman with a plan. Invest in Under 10 Minutes.

If you have an old 401(k) or two from a past job just hanging out

Hey, it happens to the best of us. There are a lot of variables involves when you move from an employer and get a new job, and it’s easy to let a former employer’s 401(k) or two get left behind. The good news is that if you left it, you can probably still roll it over — either into your current employer’s 401(k) or an IRA — even if it’s been hanging out for a while. Not sure what that involves? Ellevest can help you answer this question, too and help you start your roll over  — no strings attached (more on that below).

Have an old 401k hanging out? Ellevest can help you find and move that old 401(k) or 403(b) over.

If you think you might be paying too much in fees

It’s possible. In fact, high fees on your investments are really bad news for your bottom line. According to the Securities and Exchange Commission (aka the SEC), higher fees can cost you tens of thousands of dollars over a 20-year timeline. So, how can you find out if your fees are too high?

Basically, there are two ways of finding out. First, you can start a rollover — for either an IRA or a 401(k) — to Ellevest, no strings attached. They’ll take a look at the fees you’re paying now and let you know what they think your best bet is going forward, even that doesn’t mean recommending that you switch to them. Why? Because, they’re a fiduciary (aka they’re the good guys) and being a fiduciary means that since we’re an SEC-registered investment advisor — so, they’re obligated to act in your best interests.

But the financial industry doesn’t follow the same standards when it comes to providing investment advice to clients. Investment advisors like Ellevest have a duty to put your needs first. No ifs, ands, or buts about it.

So, do your research. I did my due diligence and most of the 401(k) plans I saw had higher fees than Ellevest’s do. So, I’m happy I used them. Either way, no matter where you start with your retirement planning and investing, the most important thing is that you get started. (Because you don’t get that fabulous — Mai Tai sipping — future retired life if you don’t do that.)

Click here to create your free Investment Plan from Ellevest

Pay yourself first: Your new resolution for 2019. Make sure a cut of every paycheck goes straight to your retirement or savings account and does not pass go.

Here are more personal finance topics for you…

How to Divvy Up Your Paycheck for Financial Success: The 50/30/20 Rule

The Personal Finance Tips Everyone In Their 20s Should Follow

3 Reasons Why You Need a Roth IRA- Even If You Have a 401(k)

Questions? We’re here to help. Leave us a comment and we’ll get back to you!


ellevest, how to save for retirement, how to save in your 20s, how to start investing, investing for beginners, sallie krawcheck

Show Comments