Wildly successful women have a lot in common. From a steady work ethic to killer confidence and street smarts — they have the “it” factor — and while it may appear like it takes massive intellect to become successful, that isn’t necessarily always the case.
Thankfully, these days being a “successful woman” isn’t defined as just one thing. . . and while there are many ways to get to the top, there is usually one common denominator we’ve noticed among all successful women: and that is that they plan for their future (and that includes planning for their retirement and investing their money).
Investing is one of those things we know we should be doing, but most of us find it totally terrifying. Why? Probably because most of us equate Wall Street with grown-up frat boys bros who drink too much, act rudely toward women, and generally behave poorly (amirite?). Do you really want to give your hard-earned money in their hands? (No.)
Think you need a lot to invest? You really don’t – all it takes it $1 to make your first investment.
The wealth management industry has historically measured its success by whether its products outperform the market — if your portfolio outperforms: win; you have success. If it underperforms, you’re owed an explanation. Sure, it’s gotta be better to outperform than underperform, right? But does this necessarily mean you can reach your goals?
Ellevest a digital investment platform made with women in mind approaches the puzzle of investing and planning for retirement completely differently. They don’t set out to beat the market, but rather to help you achieve what you actually want in life through something they call “goal-based investing.”
Here’s how goal-based investing works, and why it’s important — your new financial future starts here.
Investing Can Make Your Big Idea Into A Real Plan
Say you want to start that dream business in a few years. You talk about it all the time, tell your girlfriends about it, read up everything you know about it. You want it really bad; you’re fired up!
But your chances of actually starting that business don’t budge. Strange, right?
Fast forward a week or two later and you’re still fired up, so you decide to write down your vision. The British Journal of Health Psychology conducted a study in which 91% of participants who wrote down a goal (in the case of the research, a goal to exercise) actually achieved it. As for the participants who didn’t write anything and just read pamphlets on the benefits of exercise for motivation — only 35% ended up working out.
So, you jot down that you are going to start your business, what the business is going to be, and when you are going to start it.
Now that you’ve got your plan down on paper, it’s time to figure out “the how”. How exactly you’re going to make it happen. This is what makes you successful.
You’re Plan Is Set… Now What?
Here’s the thing: Starting that dream business (the one you finally wrote a plan for) isn’t as easy as simply starting to exercise. It requires money. So the next step is figuring out how to pay for it.
Saving is one option. There’s no risk involved there, which probably sounds pretty good, right? But hold on — with interest rates on savings accounts awfully close to 0% these days, simply saving your money means you’re not moving toward your goal; once inflation is accounted for you could actually be losing ground,
Another option is you could invest and try to beat the market. As noted, this is what a lot of investing firms aim to do; but, as a group, they don’t actually achieve this. (Instead of the aggregate of these firms by the number of their fees. And a study from S&P Dow Jones Indices found that of fund managers outperformed the market over a five-year period.)
This is where Ellevest, comes in because, like you, they are planners. When co-founder and CEO, Sallie Krawcheck, realized the investing industry has been, frankly, “by men, for men” — and has historically kept women from achieving their financial goals, she took action and made it her mission to unleash women’s financial power and get them invested in their biggest goals.
Ellevest has no minimum so you can start investing with as little, or as much as you like. All it takes is $1 to make your first investment today.
That’s why the first thing you do when you sign up with them is you create a customized investment plan — for free — specifically designed to help you reach financial goals like starting your own business, retirement, having kids, buying a home, taking that dream trip, etc.). Kind of like how writing down your goals can increase your chances of actually achieving them, they think having an investment plan at your fingertips makes it easier for you to own your finances.
Investing vs. Saving: What’s the difference?
10% is the average annual return the stock markets have produced since 1926. This includes the lowest lows: The Great Depression, the massive slide after September 11th and the financial crisis of 2008, according to the Investor Protection Trust,
Now, Let’s Compare What Would Happen If You Put That Money Into A Savings Account. . .
According to the CNN Money, the average interest rate on most savings accounts is actually below 1% — about 0.06%. You read that right. A lot of women tend to think of saving as the “safer” route, but we need to start looking at it differently. “So, if you’re making $85k a year and putting 20% of your income in the bank, you’re losing out on $1.1 million or more, over the next 40 years,” says Krawhceck.
“Money is power. Money evens the playing field for us as women. Money is knowledge. Money is confidence. Money is freedom. Money is, ‘Take this job and shove it,’” Krawcheck says. “For a professional woman, squirreling away paychecks into a savings account and not investing that cash can translate into hundreds of thousands or even millions of dollars lost over the course of a lifetime.” The good news? ” We can fix this,” Krawcheck says. Let’s get started.
How Do I Know What Amount to Invest?
If you’ve paid off all your high-interest debt and built your emergency fund (three-six months of take-home pay held in cash), then you’re ready to take that next step towards building a more healthy financial future for you and invest your money.
The experts, including Ellevest, say the way to look at your salary, your take-home pay, is 50% for needs — rent, food, etc.— 30% for fun—trips with friends, a nice dinner—and 10% for future you—this should be invested. You invest in goals for future you like starting a business, buying a house, going on a trip around the world, having a baby.
If you’re ready to take the first key step in taking financial control, sign up to get a complimentary financial plan from Ellevest (yup, you read that right: it’s free).While many traditional advisors charge upwards of $1,000 for a financial plan. Ellevest is working to close the gender investing gap, so they charge nothing for theirs.
To sign up, all you have to do is head to ellevest.com, set up a username and password, then answer a few basic questions about yourself (name, income, where you live). From there, you’ll choose which goals you want to achieve (buy a home, start a family), and then Ellevest will show you how much you’ll need to invest to reach those goals. You’ll see a personalized investment portfolio for every goal, plus the details of each portfolio. You can save your Ellevest financial plan, come back to it, modify it, or share it with your girlfriends and family, whether you invest with Ellevest or not.