The real power move: Getting our financial sh!t together
Let's talk about a real power move – women taking the reins of their finances. In a world where we're rocking boardrooms and breaking glass ceilings, it's time to make sure our wallets are flexing just as hard. So, why is it so crucial for us to be money-savvy?
Recent US data shines a light on the financial landscape for women, and it's time to flip the script. Did you know that only about 38% of us feel confident when it comes to taking the plunge into investments according to the latest Women and Investing Survey?
However, one of the most promising findings is that investing is particularly popular with younger women. Fidelity found that 71% of millennial women were investing outside of retirement, compared to 67% of Gen Xers and 62% of baby boomers.
Women are also getting started with investing much sooner. In 2022, Fidelity found that women in the 18-to-35 age group first opened a brokerage account at age 21 on average and a retirement account at 20. Women 36 and older first opened a brokerage account at age 30 on average and a retirement account at 27.
There’s also data that shows that women may be better at investing than men, even if they hesitate to get into it. Women outperform men by 0.4% in a 2021 analysis of 5 million Fidelity customers over a 10-year period. A University of California, Berkeley study conducted in the 1990s found an even larger performance difference of nearly 1%.
A Wells Fargo study covering January 2016 to December 2020 provides more evidence that women do better than men at investing. Women tend to take on less risk than men. Wells Fargo found that women took approximately 82% of the risk that men took when investing.
But it's not just about throwing dollars into the stock market; it's about making our money work for us. And don't even get us started on retirement planning - we're in it for the long haul. Even with massive improvements over the last decades, the data shows a gap, with many women feeling like they're playing catch-up. But guess what? It's never too late to level up.
So grab your coffee (or a glass of bubbly) because we're ready to dig in. Cheers to breaking barriers and building wealth – 2024, let's do this!
First, let’s master some vocab:
Stocks: Stocks represent ownership in a company, and owning shares means you own a portion of that company.
Bonds: Bonds are debt securities where investors lend money to an entity (government or corporation) in exchange for periodic interest payments and the return of the principal amount at maturity.
Portfolio: A portfolio is a collection of financial assets, such as stocks, bonds, and cash, held by an individual or institution.
Diversification: Diversification is the strategy of spreading investments across different assets or asset classes to reduce risk.
Compound Interest: Compound interest is the interest earned not just on the initial investment but also on the accumulated interest from previous periods, leading to exponential growth over time.
401(k): A 401(k) is a retirement savings plan sponsored by employers that allows employees to contribute a portion of their salary on a tax-deferred basis.
Mutual Funds: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities, managed by professional fund managers.
Dividends: Dividends are payments made by a company to its shareholders from its profits, usually in the form of cash or additional shares.
Risk Tolerance: Risk tolerance is an individual's ability and willingness to withstand fluctuations in the value of their investments without panicking or making impulsive decisions.
ETF (Exchange-Traded Fund): An ETF is a type of investment fund and exchange-traded product, which tracks the performance of a specific index, sector, commodity, or asset class and can be traded on stock exchanges like individual stocks.
Asset Allocation: Asset allocation involves distributing investments across different asset classes (like stocks, bonds, and cash) to achieve a balance between risk and return based on an individual's goals and risk tolerance.
Liquidity: Liquidity refers to the ease with which an asset can be bought or sold in the market without causing a significant impact on its price.
Bear Market: A bear market is characterized by a sustained decline in stock prices, typically by 20% or more from recent highs, indicating a pessimistic economic outlook.
Bull Market: A bull market is a period marked by rising stock prices, optimism, and positive investor sentiment, typically driven by economic growth and favorable conditions.
Index Fund: An index fund is a type of mutual fund or ETF designed to replicate the performance of a specific market index, providing broad market exposure.
Meet Ellevest:
Ellevest is one of our favorite financial hacks. Their resources and app are SO incredibly helpful and easy to navigate. All of their content is approachable, interesting and enlightening. They're truly the experts in finance for women, whether that's budgeting for the year ahead, getting started in investing, saving for retirement or anything else along your finance journey.
Ellevest is here to help women build wealth so that they can live the lives they want — because when women control their own money, everyone is better off.
Their journey building a woman-first financial company began in 2014 with a team of industry experts with decades of experience on Wall Street. Today, with a community of more than 3 million, a $53 million Series B funding round, tens of thousands of people using Ellevest, and $1.5 billion in assets under management, they’re killing the finance game.
What grew from an idea to make investing more accessible for women now permeates the company and all of their offerings.
Some of our favorite resources from Ellevest:
Survey: 86% of Women Say Investing Makes Them Feel Powerful
23 Money Tips & Career Advice to Set Yourself Up for Success in 2024
Get a Holiday Bonus? Here Are the 7 Smartest Money Moves to Make
What Is Gender-Lens Investing and Why Is It Important?
15 Questions to Ask Your Financial Advisor (and Other Money Pros) Every Year
12 Small Money Habits to Pick Up in 2024 So You Know You’re Doing the Right Thing