For decades now, actually centuries, women have been driving change on so many levels—in the workplace, at home, in government, and on social and cultural issues. However, there remains a frontier we have yet to truly conquer or find our footing: investing.
Merrill, a Bank of America Company, released some eye-opening data on this front earlier this year. The company found that while women’s confidence in nearly all other financial matters is equal to or greater than men’s when it comes to investing, we underestimate ourselves and our capabilities. Only about half of women (52 percent) say they’re confident about investing, compared to 68 percent of men. It’s also worth noting that failing to invest is the No. 1 financial regret among women surveyed by Merrill.
The time has come to address this insecurity. Investing is not only key to building long-term wealth, but also to allowing women to truly step into their power. On this all-important point, the Merrill report notes: “Today, women’s lifelong financial wellness is at a tipping point. Thanks to a seismic shift toward women’s growing personal and financial power, they are poised to move into true financial independence, enjoying all the freedom that it brings. Yet there is still a trail left to blaze.”
For those ready to blaze the investing trail, here are tips from leading financial advisors about how to shake that lack of confidence and get started.
Start talking about money
The first step toward gaining financial confidence is to begin simply talking about money. Because (for those who may have missed the memo) the reality is that women absolutely hate doing this. The Merrill report, for instance, found that 61 percent of women would rather discuss their own death than money.
“Many women have grown up with the mindset that money is one of the few hush-hush topics that should be avoided in polite company at all costs. But if you want to be in control of your financial life, overcoming a fear of money is necessary,” says Ella Gupta, personal finance ambassador for the money app Greenlight, and a Gen Z personal finance expert who’s already blazing her own trail with the publication of her book Gen Z Money $ense: A Personal Finance and Investing Guide ($17.99, Amazon).
Need a little help getting the free-flowing money conversations started? Try establishing your own trusted financial community, suggests Gupta. And use this community to learn from the experiences of other women, and openly exchange tips.
“Community also provides accountability throughout the process. You could even begin an investing club with other women, to discuss ideas and share research into prospective funds or companies,” Gupta adds.
Because money taboos loom so large for women, they often fail to invest, and fail to begin saving money earlier in life. Women are simply not taking advantage of critical wealth escalators in the same way that men readily do. If this is to change, women need to work together to eliminate the taboos and talk about investing, says Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America.
“Speak openly and ask questions about investing and personal finance more broadly to friends, families, employers or financial experts,” says Sabbia. “Seek input and guidance, and ultimately create a plan for trickier financial moments such as investing. Trusted advice can be what you need to eliminate decision paralysis and move forward.”
Take an education-first approach
You may be under the mistaken impression that some of us are simply born with investing know-how and prowess, while others are passed over by the investing fairy during the distribution of such natural talents. That however, is not exactly the case. Investing knowledge has to come from somewhere, says Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America.
“While investing has been made to seem complex, and certainly can be, even women brand-new to investing can successfully get started with an education-first approach,” explains Sabbia. “Whether it’s personal research, an online class, or seeking expert advice, learn about market fundamentals, including the risk and returns of equity versus bonds.”
While you’re at it, assess your personal risk appetite and investing goals, adds Sabbia. To get the ball rolling on all of these fronts, you might try identifying a company that you personally connect with, or are interested in, and then follow their financial performance for a couple months to familiarize yourself with the market.
Define your goals and start small
Take the time to really consider and flesh out what you’re ultimately hoping to achieve from investing— whether it be a quick return, or to slowly building wealth over time. By establishing concrete end-goals, you’ll be better able to develop an overall investment strategy and choose investing vehicles wisely to ensure you’re advancing toward what’s important to you, advises Sabbia.
“After you’ve set a goal, break it down into bite-sized benchmarks and get started,” Sabbia adds. “The notion of needing to have a lot of money to begin investing is not true. Ease into investing by starting small, even if it’s only $20.”
Use whatever amount of money you’re comfortable with to initially establish an investment account, and then create a plan to systematically continue adding to that account.
“The longer you add money, the more you will see results,” continues Sabbia. “The key here is to make regular, consistent contributions to your investment accounts, so you’re always making progress toward your target.”
Utilize the tools available to you
As you embark on your investing journey, it can be a good idea to get your feet wet by capitalizing on workplace benefits offered by employers, such as investing in 401(k) plans and health savings accounts (HSAs). Both of these financial vehicles are great tools to start building wealth today, that you will be able to rely upon later in life, says Sabbia.
“Women should start savings plans early and maximize contributions to shore up resources for the long-term,” says Sabbia.
HSAs are particularly good choice for this because unlike other “use it or lose it” vehicles, HSAs are portable and controllable—meaning you can begin putting money in them now and they can be used to pay for qualified health-care costs well through retirement.
Just get started
Time, of course, is your greatest advantage when it comes to investing and building wealth. It’s a fact not lost on Gupta, a Gen Z investing influencer who’s hoping to bring about change for women of her generation.
“Compound interest—dubbed the eighth wonder of the world by Albert Einstein—is powerful, and time has a huge impact on your nest egg,” says Gupta. “Investing can seem daunting, but once you take the first step it becomes easier. If you’re nervous about investing, consider getting started with fractional shares. A fractional share is just what it sounds like—fractions or pieces of whole shares of stocks and funds.”
The future is at hand
Despite the many headwinds women face, Merrill research has found that young adult women of today are paving the way for future generations and are actually progressing toward financial independence faster than their male counterparts.
Gupta is a prime example of this reality. She started investing at age 10, opened a 401(k) at 14, and published her first book about investing at age 16. If all women apply Gupta’s proactive mentality to money, investing and wealth-building—and begin doing so at an early age—the results could be extremely powerful. The good news is that women investors are set up to thrive, concludes Sabbia.
“Women tend to take a longer-term view on finances then men, which gives them a powerful advantage to approach investing in a smart, disciplined, and future-oriented way,” she says.