From pop culture to the talking heads you see on nightly financial news programs, the investment world has long been characterized by a certain type of imagery. You know what we’re talking about: Men in suits spouting off tips about the next “hot stock.” Men on the trading floor, surrounded by ticker tape and loud bells.
What’s the common feature in each of these images? Men. Women are never included in these depictions, which has given way to a systemic bias, constructed since the early days of Wall Street: Women don’t — and shouldn’t — invest.
But the problem with that bias (beyond the obvious)? It simply isn’t true. A recent Fidelity Investments study showed that women investors actually outperform male investors by 0.4%. Moreover, women trade less often, react more patiently to market volatility and are less focused on achieving “social status” benchmarks, such as “beating an index.”
Yet, there is still a common perception among women that assumes the opposite. For instance, in the same Fidelity Investments Study, only 9% of women believed they could outperform men in investing. So, how can we change the conversation?
Last week, I teamed up with Ellevate to work hand-in-hand with a small group of women who were seeking financial empowerment and guidance. During the event, I shared some cornerstone financial skills and insights; guided participants through fundamental financial planning exercises; and helped them discover some inspiration that lies in the possibility of financial security.
Here are a few key points from our discussion:
Financial Planning 101
At The Humphreys Group, we have always believed in the importance of establishing financial goals that match up with your values — these are the people, priorities and ideals that matter most to you. Taking this approach allows you to gain a more holistic, big-picture view of your financial future and sets you on a more rewarding and intentional path toward achieving your goals.
After discussing this approach with the group, we broke down financial planning to a more granular level, introducing the concept of the “financial dashboard”: A top-level view of the key figures you can use to identify your level of financial wellness, including income, expenses and net worth. Today, there are plenty of convenient, digital tools you can use to keep a pulse on your financial dashboard, such as Mint, YouNeedaBudget and Tillerhq. By focusing on the basics of financial planning first, we set a strong foundation for the next segment of our discussion:
“Should you invest or save?” “Why invest in the first place?” We kicked off our discussion on this topic by answering some of the questions that all new investors face.
At its most basic level, investing is the process of buying an asset for the potential of it growing in value. As opposed to saving, investing gives you the valuable opportunity to grow your wealth over time — and regardless of what goals you have set for the future, it’s important to start investing early, proportional to your time horizon and tolerance for risk.
After reviewing some basic, yet essential investment principles, we discussed some critical steps all women should take to maximize their savings for one of the most important milestones they’ll face: retirement. Two basic steps include:
- Maximizing Your Employer Match: Make sure you have a strong understanding of what your company offers, in terms of matching contributions, and how that affects your retirement goals.
- Choose Your Retirement Accounts Wisely: Before jumping straight into some of the most typical savings vehicles, such as a 401(k) or a standard savings account, take time to research and evaluate your options. Review your potential tax liability with each account before making a final decision.
Take Control Over Your Financial Life
Beyond the practices of financial planning and investing, there are countless other financial issues and challenges that affect our day-to-day lives. Should you pay off your debt or invest in a retirement account? Should you direct your savings toward your children’s college education or stock them away for your future retirement? What about insurance against unexpected events? Planning for future health care expenses?
The answers to these questions are different for every woman — because every financial situation is unique. Of course, there are general guidelines and principles that can help you get a better grasp on your money and empower you to make the most informed decisions.
The most important step is to simply get started. If you need a resource to help you put your best foot forward:
Check Out “Rewriting the Rules: Telling Truths About Women and Money”
Our new book debunks some of the problematic myths that have held women back from financial independence, while empowering you with practical solutions and actionable tips to take control of your financial life. We encourage you to download your free copy, and let us know what you think!
If you’re ready to learn more about financial planning and investing, we also encourage you to contact our team at The Humphreys Group. We can help answer your most pressing questions, and help you set and achieve your goals through the power of focused financial planning and disciplined asset management.