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Senior man making a meal on the hob talking to his wife, she is holding a cup of coffee and smiling. The man is using a frying pan on the stove.

As a woman, knowing how to invest is vital for your future. Think about it – women live longer than men. According to Scientific American, “Women outlive men by about five to six years. By age 85, there are roughly six women to every four men.” Yet, according to The Transamerica Center for Retirement Studies, 46% of women are not too confident or not at all confident about their retirement savings (compared to the 36% of men who are not confident).

Statistically, this means women should take a much more active role in investing. They should strive to become more knowledgeable investors, so that if they get married and outlive their partners, they know exactly how to manage their money in retirement. Marriage or not, understanding and managing one’s retirement account is pertinent as we grow older.

Of course, in order to become a confident investor, you have to start somewhere. Below, I listed four tips for first-time women investors.

Understand Your Work-Sponsored Retirement Plans

If you work for a company that offers a retirement plan, take the time to understand your benefits. Read through your employee handbook, and ask any questions that come up. If you have a Human Resources department, they should be able to help you with the basics.

Sometimes companies have vetted financial advisors you can speak with to help you with the process. Be wary of any advisor who seems too much like a salesman – their primary goal should be helping you.

If your employer offers an employee match, make sure you understand how much of your contributions they will match and what happens to those matching funds should you decide to leave your job.

According to Bloomberg, “Two-thirds of all Americans don’t contribute anything to a 401(k) or other retirement account available through their employer.” So, by taking the time to understand your retirement plan and actually investing, you can help change that statistic.

Budget a Certain Amount of Money for Investing

If you don’t have a work-sponsored retirement plan, it’s important to make investing a regular part of your budget. Many people think that if they have money left over at the end of the month, they’ll invest their extra funds. However, rarely do people have money left over at the end of the month (something always comes up!)

So, instead of waiting until the end of the month to invest, make investing an important line item in your budget. Putting money away for your future should be just as important as paying your mortgage and electric bill. If you’re worried about remembering to invest as part of your regular monthly payments, you can set up an automatic transfer to your retirement account.

Research Your Best Investing Options

Many people are intimidated by the idea of investing. After all, there is so much investing lingo that it can sometimes feel like people are speaking another language. Luckily, investing is relatively straightforward once you understand the terminology.

You can start by reading different books on investing, listening to personal finance podcasts and speaking with trusted financial advisors. By doing this, you can learn the differences between stocks and index funds, or what it means to have a Traditional IRA or a Roth IRA. You can also learn what it means to diversify your investments. And, if you’re still scared to invest after taking the time to do that research, you can also learn about some conservative, low-risk investing options as well.

Think About the Long Term

My last tip for first-time investors is to think about the long term. It can be hard to allocate part of your paycheck to investing at first. It can be even harder to turn on the news and hear about stock market dips. That’s why I recommend spending a lot of time understanding investing and doing research on your own before committing.

You don’t want to follow a hot stock tip that your coworker tells you about or only invest in the mutual funds your dad tells you buy. Investing should be something you take an active role in and understand. After all, no one cares more about your money than you.

Remember, investing is relatively simple once you understand the terminology. Plus, when you invest with your future in mind, you shouldn’t be too concerned with short-term dips or gains.

Over the long run, the wonders of compound interest should help your retirement accounts grow, despite short-term spikes and dips. This means that once you decide to stop working, you should theoretically have enough money to enjoy the lifestyle you want – and you’ll have yourself to thank for it.

What other tips do you have for first-time women investors? Did I miss anything important in the list above?

This Post Has 2 Comments

  1. Start saving early, and please teach your kids early about finances and investing. They have time on their side to compound their money. The power of compounding is an eye opener for most. Join an investment club and learn together. The Beardstown ladies did it, so can you. BetterInvesting is an organization that teaches individuals about investing, and has done so for many years. Check it out, they have a 30 day free trial to explore their site. They also have a YouTube channel with free videos to help guide you. Moneysmart Week is coming up in April 2018. Check your local library for events, or Google #MSW2018

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