In recent months, the pandemic has led to an unstable financial outlook for many people. If you’re feeling troubled about your future, this means that you should start preparing for your expenses by saving up where you can. In ‘7 Steps to Take to Prepare for an Uncertain Financial Future’, we discussed how the process of setting goals can help you on your savings journey. However, Dame Helena Morrissey, founder of the 30% Club which campaigns for greater female representation in leadership, notes how the majority of women tend to be more cautious when it comes to investing compared to men. Because of this, fewer women are comfortable with investing. However, with some time and effort, women can actively put themselves in a stronger financial position with some investments.
Have a goal in mind
The first step to any plan is having a goal in mind. Envisioning the steps you need to get there comes second. Whether it’s saving up for your next holiday, a mortgage payment, or your children’s tuition, having a number in mind will help you figure out your time scale. A BBC article describes how you should ask yourself why you want to invest. Consider the sacrifices you are willing to make to reach your goal and think about how much you’re willing to lose. Will you be able to invest your income over a period of 10 years or more or would you prefer a steady return on your income? While savings accounts tend to be a safer choice, they have relatively low-interest rates, making them less ideal for short-term goals. Coming up with a clear strategy means deciding which investment techniques are the most effective for your specific goals.
Do your research
Depending on your goals, there are a variety of ways to grow your savings. Learning about these different types are and weighing their pros and cons will help you decide where you want to invest your funds. In general, less risky investment types include certificates of deposit, savings accounts, and money market funds. Another popular option is trading on the stock market through an online broker. Buying shares of a company will help you reap the dividends that they earn. While they are riskier, they tend to be more financially rewarding in the long run. Similarly, FXCM describes how currency trading or foreign exchange enables you to make trades based on a currency’s value. It is also less volatile than the stock market. However, no matter which course of action you decide to take it’s important to build an educational foundation before making any investments. Signing up for women-led online courses and consulting reputable articles is a great way to get started.
Invest small amounts at a time
A common mistake that some beginners tend to make is investing too much of their income in a single area. When you’re just starting off, it’s much better to start with a smaller amount. Emilie Bellet, an ex-private equity analyst for Lehman Brothers recommends that women start with a regular payment of just £25 a month. She explains how investing on a monthly basis, instead of putting down a large lump sum will help you more evenly distribute your risk. In addition, she acknowledges the specific challenges that women face. Because of the existing wage gap, women prefer to hold some cash as an emergency fund. On the other hand, narrowing the gender investment gap will help boost your confidence and help you gain greater control over your finances. As you gain more knowledge, you can start investing larger amounts.
At the end of the day, investing is all about being patient. This is something that can give women investors an extra edge, according to an article by finance blogger Sabrina Kessler. This is because women are more likely to stick with an investment. In fact, a U.S. study found that while female investments performed only 0.4% better than male investments, the projections over a number of years lead to a whopping $250,000 (£191,406) difference. By following their lead and being consistent, you’re likely to see gradual returns that will add up in the long term.
If you are thinking of investing now is the time to start. Don’t let any preconceived notions hold you back.