Millennials sometimes don’t get proper credit for many things – our fluidity with technology, our natural instinct to marry environmental ethics with business, and so much can be said about our progress for women’s rights. However, one area that needs drastic improvement is our investment habit: 85% of Millennial women do not invest, and it is imperative that we change this around right away.
This is why every working woman should invest
“Investing is one of the most important things you can do for yourself. It can build your wealth….not by a little, but by enough to make a real difference in your life.” Sally Krawcheck, CEO and founder of Ellevest, drives this concept home with serious facts. Despite all the advances we have made in the workplaces, we still lag behind our male counterparts when it comes to retirement and money. On average, men’s retirement account balances are more than 50 percent higher than women’s and this is further compounded by the fact that we tend to live an estimated five to six years longer than men. This means we not only earn less, we also need those assets last longer. Given these statistics, it’s critical that we ask not only why this gender retirement gap exists, but also what we can do about it. Krawcheck concludes with the fact that “we’re doing most of the hard work around money (you know, going to work every day, turning in that amazing design, landing the difficult-to-close client, beating our sales projections)….but we’re only getting about half the reward. And so we’re depriving ourselves of the ability to take on more risks in our career if we don’t have a financial cushion built up.”
How did we get here?
54% of women in the workforce do not have a retirement plan. To make facts even more stark, within the 46 percent of women in the workforce who do have a retirement plan, many do not have enough saved. Thinking back to the patriarchal structure of how money used to operate, it’s not difficult to understand why. Couching simple concepts into deceptively complex strategies such as “outperforming markets” and restrictive “asset minimums” have made investing seem out of reach for many.
But Ellevest and their team of specialists are there to make sure you’re setting Future You up for success. They are here to prove that no one can predict when investments will go up and down and very few can outperform the market consistently (on average, the market has returned 9.5% annually since 1928 so you don’t need to “beat the market” with the “perfect” stocks to get a return on your investment. You also don’t need a large sum of money to start – it’s all about taking what you have now and making it into a habit that will continue to grow throughout the years. It’s all about the long game.
How to know when you’re ready for an investment account (your 3-step checklist)
You don’t have any credit card debt. This is important because this means that you are able to support your current lifestyle, minus extenuating debt such as student loans, car loans, or mortgages. If you’re able to pay off your credit card every month, then you can start building your investment plan.
You have a six-month emergency fund. Investing is the most beneficial when it’s a long-term venture, meaning you need to be able to leave that money in your account for many years. The money you put in will go up and down with time, and you will need to be able to wait it out to watch it grow. So while you’re waiting, make sure you have an emergency fund to cover all those unanticipated life costs.
You have to be maxing out your retirement contributions and be on track to replace at least 70% of your income at retirement. Three important reasons why: First, so you get the maximum tax advantage when you do retire. Secondly, so you save as much as you can for retirement every year, and lastly, so you are confident that your retirement savings are on track to give you a “comfortable and content” retirement.
Once you meet all these requirements, you can open your own investment accounts. Still have a little cold feet? Check out our Investing 101 guide to get more details on how investing works. Then, head over to our checklist that will give you the steps to opening an investment account.
Pop open that bottle that you’ve been saving to celebrate your first steps to meeting your financial goals!