Though investing is one of the more reliable ways to grow wealth, there is a wide gender investing gap. Only 41% of women are confident in their investing skills, according to a 2018 Merrill Lynch study.
This has a lot to do with money advice geared toward women, says Tori Dunlap, founder of Her First 100K, a blog and financial education platform. Money advice in women's magazines tend to focus on budgeting and overspending, according to a 2018 Starling Bank study of 300 articles. Men's magazine articles, by contrast, tend to focus on and recommend investing.
"Women either wait longer to invest than men or don't invest at all," Dunlap says. "It's important for everybody, but especially women, to get started as soon as you can."
The reason investing less money sooner is better than investing more money later is because of compound interest, says Mark La Spisa, a certified financial planner and president of Vermillion Financial, which is the interest you earn on your money, plus the interest it's already accrued.
"Starting as early as possible, even if it is only a few dollars," he says, "is better than doing nothing or waiting until you accumulate a significant amount."
Take this classic example of compounding from the Federal Reserve Bank of St. Louis. The investor who starts earlier ends up with a bigger savings balance at age 65, even though they put aside a third of what their later-starting friend contributes. Those extra 10 years of compounding growth put her ahead.
Starting with less money sooner is better than starting with more money later, Dunlap agrees. "Every time I post about investing, I get comments saying 'I can't afford $200/$350/$500 a month!' Ok. Then start with $50. The point is that you START," she recently tweeted.
It's especially important for women to think ahead, as women tend to live longer than men. "To live 30 to 40 years without working during the most expensive years of your life, you have to invest," Dunlap says.
What often keeps most people, including women, from investing, is fear, says Dunlap, and there is data that backs up that idea. Some caution is reasonable: Investing does come with risks, which is why it's useful to understand your own risk tolerance and design your portfolio accordingly to make sure it's diversified.
Still, women were, on average, more successful investors than men, according to a 2015 Fidelity study, which showed that female investors netted higher returns than their male counterparts, in part because they were likely to have more diversified portfolios. Women were also more likely to invest with long-term goals in mind. Men were 35% more likely to make trades than women, while women tended to hold onto their stocks during market fluctuations.
"We have this analysis paralysis when it comes to investing," says Dunlap. "We think we have to know everything out there to get started, but that's not true."
To alleviate fear in first-time investors, La Spisa shows them an Ibbotson chart, which shows the hypothetical value of a dollar invested in the market since 1926. Investors can see bumps and drops, along with subsequent market recoveries — and an upward trend.
"They will usually find that the market over the last 90 to 100 years has performed in a negative way 25% of the time and positive 75% of the time," he says. Seeing this chart helps prepare clients for market fluctuations and especially those times when the market does drop.
Another reason to invest early is because it provides the "added benefits of learning about market cycles," La Spisa says, since the more you know, the more capable you are to fight the fear of investing.
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