Disclosure: Vanguard invited me to this event and provided me with educational materials, meals, and a gift card to offset travel and child-care expenses. The views and opinions in this post are my own.
When it comes to stocks and bonds, I’m all thumbs. I have an issue with sitting down, figuring out where we should invest our money, and doing the hard part of leaving it invested. Because of the high risk of stocks, they make me very nervous. The idea of “high risk yielding high rewards” scares this meticulous woman. Not surprisingly, according to findings shared by Vanguard, most women share this issue. We are great investors, but always have the hurdle of believing how great we are and creating a financial self-esteem. When women actually invest in stocks, they tend to pick responsibly, with a plan and stick to it; the best attributes of great investors.
Karin Risi, the head of Advice Services at Vanguard, informed us that women are able to thrive at investing once we understand how to invest and are able to set guidelines and goals for ourselves. Karin actually gave us a simple way for women to set themselves up for success: decide on your goals, create balance in your investments, decide on the cost, and always use discipline.
- Create a financial portfolio that’s geared toward long term goals. College tuition or retirement should be at the top of your list. You’ll also need to figure out your goal constraints: the time between deciding on a goal and when you want to attain the goal (age when you want to retire, etc).
- Pay attention to you asset allocation: the mixture of stocks, bonds and other investments in your portfolio. You want to have a cohesive and balanced amount of high risk , moderate, and low risk investments. The more diversifed your allocation is, the bigger the savings.
- Don’t be an “bottoms up investor”; bottoms up investing is when you pick stocks based on your lifestyle. Just because you love starbucks and Tieks shoes doesn’t mean you should invest in them. Do your homework and pick the stocks that show growth potential, and fit into your investment budget.
- Unlike the stock market, cost is totally within your control. You, and you alone, decide how much you will invest into a company. Decide on your investment budget and stick to it.
- The less you pay for your investment, the more output you’ll get. Think about it this way: you can invest only 5 dollars, but you’ll still be able to see that 5 dollars grow exponentially with the market. If you lose that 5 dollars due to a drop in the market, it’s better than investing 500 and losing it. Even small investments reap rewards in stocks.
- Figure out how much you want to invest monthly into your long-term goals. Split that amount and decide how much each goal needs in order for your to attain it in your timeline. A goal that needs to be attained sooner may need more money from the budget.
- Treat your investments like ovens, not slow cookers. Your portfolio shouldn’t be part of a “set it and forget it” attitude. Review your investments periodically (quarterly is best) and see what stocks are doing well and if you need to move your money to more profitable parts of your portfolio.
- Make a plan and stick to it. If you are saving for retirement or college, be specific about what those goals entail. Will you be moving for retirement? Do you need to save for a downsized house? Are you planning to pay for all of your children’s education, or just a few years of college? By being specific you are more likely to stay dedicated to investing.
photo courtesy of Vanguard
Vanguard was built on the DIY approach to investments and in that vein will be launching a Women and Investing series on their blog. While you can do the work yourself if you find you need help consider talking to a financial advisor if you need help or have questions. Vanguard offers a variety of approaches, you can learn more here.