
One of our major goals for 2016 was to start taking ownership of our finances. But breaking bad money habits and trying to save money is tougher than we originally thought — even with all the awesome millennial-focused finance podcasts we queued up in our iPhones.
B+C: In an interview with Forbes, you said, “This is my Gloria Steinem moment.” Why did you choose to create a women-only investment platform as your passion project?
SK: I never really considered myself much of a feminist until I left Wall Street. I did all the right things — such as put together gender-diverse teams — but feminism wasn’t deep in my bones. It wasn’t until I took some time off and had some space that I realized that the investing industry has been, frankly, “by men, for men” — and that has historically kept women from achieving their financial goals.
We all know money is power. And we women won’t be equal with men until we are financially equal with men. Given my background on Wall Street (and how very few women there are there), if I’m not going to work to fix this issue, who is? So I’ve made it my life’s mission to unleash women’s financial power and close the gender investing gap.
B+C: Can you explain the concept of the “investment gap?”
SK:Women don’t invest to the same extent that men do. Fewer of us have started saving for retirement, we have saved less overall and we park about 70 percent of our money in cash. This can cost us hundreds of thousands — for some of us, even millions — of dollars over the course of our lives. For some women, this can cost them more than the much-more-discussed gender pay gap.
B+C: Many women, including myself, haven’t seriously thought about investing their money. Why should the everygal consider getting into investing?
SK: Let’s take “Elle” as an example: Elle earns $85,000 a year currently. If she invests 20 percent of her salary in a diversified investment portfolio instead of keeping it in cash, in 40 years “Future Elle” may have a real reason to thank her. That’s because our calculations show that, based on historic markets, Future Elle could have anywhere between $565,000 to $2.1 million more money at that time than if “Today Elle” had kept that money in a savings account.*
You should invest because, quite frankly, investing can be life changing. That doesn’t mean that investing won’t involve some ups and downs (some of which can be stomach-lurchers!), but historically, the risks inherent in investing have resulted in superior returns, over time.
B+C: Why do you feel that women need their own investing platform? How does being gender-exclusive help bridge the gap?
SK: For years, I argued that women absolutely did not need their own investing platform. I thought the concept was vaguely insulting and, for whatever reason, I automatically equated the idea with a “junior varsity” offering. But the very fact that the gender investing gap exists is evidence that something different is needed.
Dig a little deeper, and you can note that the investing industry and most of its tools have been created by men, for men. So the “gender-neutral” investment industry implicitly has defaulted to men’s product preferences and men’s financial characteristics. (One big hint: The industry symbol is a bull — a phallic symbol if one ever existed.)
B+C: When many people think about investing, they picture a long and complicated process that only people with experience and/or education in the field should even attempt.
SK: We know! There are all kinds of myths that keep women from investing. One is that it’s all about math and guys are better at math. (Not true!) Another is that women need more financial education before they can become investors. Well, that’s pretty hard to argue with — almost everyone should be more financially literate. But men will often invest regardless (and have profited from it), while women are less likely to.
When you dig into this issue, it’s that men are more likely to invest through jargon, while women are more likely to slow down, research what the jargon means… and then not invest. That’s why we’ve outlawed investing jargon on our site and built an investing plan that you can complete in less than 30 minutes. Not 30 hours, 30 minutes.
B+C: Say you’re out for coffee with a 20-something woman who wants to start investing but has absolutely NO idea where to start. What advice would you give her?
1. Pay off all high-interest debt. That means if you can’t afford to buy something without putting it on your credit card, don’t buy it. Do not start investing until you do this.
2. Start an emergency fund. Your just-in-case fund should be three to six months of take-home pay, squirreled away in a bank account. Do not start investing until you have some cushion built in the event of an emergency.
3. Start a retirement account. This is particularly the case if your company offers a 401(k) match… in other words, free money.
4. Invest for your goals. Experts say to save or invest up to 20 percent of your salary for all your long-term goals including retirement, buying a home, starting a business and so on. Can’t do 20 percent? Then start with 1 percent, move it up to 2, then 3… you get the picture.
5. Invest regularly. That means something out of every paycheck, if you can. This may help to offset the ups and downs of investing. If you invest regularly, sometimes you’ll be investing when the market is expensive and sometimes when it’s cheap, but historically, it has evened itself out.
Are you investing a portion of your paycheck? Tweet us @BritandCo!
(Photos via Ellevest and Getty)
*See 8 Myths That Hold Women Back From Investing. The projections of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Information was obtained from third party sources, which we believe to be reliable but not guaranteed for accuracy or completeness. The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person. Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.
Your relationship with your finances is one of the most important relationships you'll ever have, and you can't avoid it. That said, for many of us, the pandemic only added to our financial stress. If you find yourself feeling frazzled, just remember that financial insecurity isn't a net-worth issue — it's a mindset issue. And, we happen to have plenty of advice on how to turn your money mindset around so you can take charge of your funds once and for all.
To start, feeling secure begins with a strong foundation, and there's no better time than now to get started stacking the bricks. It's easy to get swept up in the January "new year, new me" mentality, but really? Any time is the right time to get yourself in order. You don't need to wait for a new year, a new moon, the right moment, or a sign from above. You don't even have to start on the first day of the month — you just need to start.
Introducing NerdWallet: A Safe and Reliable Money App
To help with that, we've put together a list of the just-right-for-you ways that NerdWallet can help you monitor your financial outlook. Haven't heard of them yet? NerdWallet is a personal finance company that helps consumers make smarter financial decisions. Their website and app let you compare different financial products, find articles and tools to make financial decisions with confidence, and keep tabs on your finances (hey there, credit score, I see you!) all in one place. Plus, NerdWallet has over 75,000 glowing reviews in the App Store (and a 4.8 star rating) if you want to read up on any more testimonials.
Tim Chen, NerdWallet's CEO and co-founder, started this financial journey in 2009 after his sister needed help finding a credit card. Even with an economics degree and a Wall Street background, it took awhile for Tim to find the right recommendation (so don't feel too bad when it takes you a while, too). Their mission is to bring clarity to all of life's financial decisions.
So it's safe to say that NerdWallet is a pretty good sherpa for your journey, too.
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Did you know that the money you park in a savings account can lose value? Harsh, but true. If your money isn't earning interest that's on pace with inflation it will actually be worth less to you in the future. And if the bank charges fees? Forget about it. Make sure you're earning the interest you deserve and come out on top. NerdWallet has researched dozens of financial institutions to help consumers find the best options. The hard work has already been done for you, so you can just select the account that works best for you and your nest egg.
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Get extra credit points
Do you have the best credit card for your lifestyle? Some cards give cash back on every purchase, ones with travel perks, and ones that charge way less interest than you're paying now. NerdWallet takes the guesswork out of choosing the right credit card with simple side-by-side comparisons of different credit cards so that you feel confident choosing the right one. Whatever you want to do, NerdWallet can help you find the best credit card to get it done.
Know your options for settling down
Mortgage rates are pretty low and it looks like they're going to stay that way for awhile, so buying a home might be the move sooner than you think. But there's so much more to a mortgage than just the interest rate! To help you choose a mortgage lender, NerdWallet has in-depth reviews on multiple lenders in a mixture of categories so you get the home loan with the mortgage rate, term, and fees that's right for you.
Settle an old score
NerdWallet helps you monitor your credit score for free and helps you see how little things (like raising the limit on your credit card or paying your bills on time) can increase your score. NerdWallet partners with TransUnion® to provide your VantageScore® 3.0, based on information in your TransUnion® credit report. Your score and credit report information are updated weekly. But that's not even close to all:
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When it comes to managing your money, safe and reliable is where it's at. Establishing a healthy relationship with your finances begins when you take control and practice habits that build wealth. Signing up just takes a few minutes. Set your intentions to build a solid financial foundation, it will only strengthen your relationship with your finances. And don't be afraid to get a little nerdy while you're at it.
Photo via Shutterstock