I was recently invited by the Ladies Finance Club to be a guest speaker at a number of their events. The name gives it away! The events are aimed at women who want to learn about how to start investing.
I’m a big supporter of any initiative that encourages women to take up investing and dispel some of the crazy myths out there about what good investing looks like. Hint – it isn’t about chasing the hottest tech stocks.
Here are some of the areas I cover in my presentation and in an article I wrote for their website.
Life as we know it for the modern woman is busy! Our days are packed with work, kids, travel, family commitments, house work, study, side-hustles, socialising, exercise… and usually minimal down-time.
The daily to-do’s are constant and can easily distract us from focusing on some of our ‘bigger picture’ goals, like starting to invest. Before we know it, days, weeks and months can fly-by and we’re still yet to take 5, and commit time to our goals.
Here’s to technology!
Technology has been a huge enabler for women. Not only has it increased accessibility to information, education and a range of products and services, it’s made aspects of our lives easier and in many ways, helps buy us time, our most valuable resource.
We can now do almost everything online – our banking, grocery shopping, apply for jobs, find a new home, buy a car, book a holiday… all with the click of a button.
And, when it comes to our finances, technology is helping women access financial tools, resources and financial products, like never before. It’s never been easier to set-up an investment account and get started in minutes!
As women become increasingly engaged in their financial futures and keen to learn about investing, they’re looking for smarter solutions to grow their money.
Low cost, online investing is on the rise
The number of women accessing low cost, online investment advice is on the rise. Every day I speak to women looking to dip their toes into the world of investing, hoping to grow their wealth faster than leaving their money in the bank.
As more women realise that savings accounts aren’t the best long term solution for their hard-earned money, they’re looking for smarter alternatives, like investing into a diversified portfolio.
Let’s look at an example:
If you put $2,000 into savings account earning an average rate of 2% p.a, and added $100 per week for 20 years you’d end up with around $130,000. Sounds pretty good!
But not if you compare it to the $265,000 you could earn if you invested it into a low cost, diversified portfolio earning 8% p.a. That’s more than double your money!
As women become more comfortable with risk and the ability to earn higher potential returns, they’re choosing to start investing, dipping their toes in slowly, and absolutely loving it!
And guess what… you can start with just $2,000.
Investing aligned to your goals
The beauty of online investing is that you don’t have to worry about managing the big investment decisions yourself – automation helps do all of that for you.
You’ll be matched to a portfolio that’s aligned with your individual goals, investment time-frame and comfort with risk (ups and downs along the way). Nice right? And what’s great is, your strategy can change along the way, just as your goals often change over time.
For example, you may be saving for a home deposit to buy a home in around 3 years and hence better suited to a conservative portfolio.
However, this goal could change, instead you want your pot of funds to grow for years to come, so your strategy can change to meet your new long term investing goal, becoming more growth focused.
Selecting the right mix of investments
A good online investment adviser helps ensure you have the right blend of investments in your portfolio which is one of the tricky things to get right.
Think of it like baking a cake, too many ingredients – you’re in trouble and too few – the same. Having the right amount of investments in the right proportions will help you to maximise your returns potential and ensure you’re not taking on unnecessary risk.
The right mix of Australian shares, global shares, bonds and gold will bake that cake perfectly!
Exchange traded funds (ETFs) are the best way to spread your money across hundreds of different companies around the world for some of the lowest fees around!
At Stockspot we’re big fans of low-cost, passive ETFs. We research the ETF world continually to ensure our clients are always invested in the best ETFs.
Golden rule: pay low fees… less than 1% p.a
The golden rule with investing is ‘pay low fees’. What’s low? Less than 1% p.a.(total)! Fees are like credit card debt, they seem small and inconsequential in the beginning, but over time, they compound and guzzle more and more of your hard-earned money!
Paying just 1% p.a more in fees each year over the course of your life can cost you hundreds of thousands in lost returns.
Again, this is where online, passive investing is revolutionary for the consumer! Not only does automation drive costs down, choosing to invest in low fee, index tracking ETFs also drives costs down! It’s a win-win.
The less you pay the more for you!
Automation helps you be a better investor
When we invest, managing our own behavior can be one of the most difficult things – it gets emotional.
We can be tempted to buy and sell at the wrong time, get freaked out by what we hear on the news, or be easily swayed by the opinions of friends and family. It’s natural, we’re human beings.
Automation is gold because it helps us manage our own behaviour, removing the emotion and instead letting the smart algorithms do the work optimally.
Less worry and stress for you and more time to focus on things you enjoy.
Investing really is the one area in life where the less you do the better. It’s no wonder the low cost, online investing trend is exciting the ladies!
Staying on track with your goals can be challenging sometimes, so again automation can help you stick to your plan and set good habits. Setting-up a regular, automated transfer is so quick and easy to do, and really pays its dues.
The graph below shows the benefit of topping up with $100 per week versus not over 20 years – a difference of around $240,000.
This really highlights the power of topping-up. If you can automate it, you’re less likely to stray from the plan and will super-charge your wealth accumulation.
Taking action brings peace of mind
When it comes to investing, all you need to do is start. Once you do, you can have peace of mind knowing your ‘bigger picture investment goal’ is taken care of and cross that off your list.
Then, all you need is patience to let your money grow over the years. Something boring becomes brilliant in years to come!