Investing is a key route to funding major life goals, from buying a house to retiring, and yet, frustratingly, women are less likely to invest their savings than men. On Monday, Ellevest, an online investing platform for women, launched “The Go-Getter’s Guide To Investing,” a microsite that breaks down investing for a female audience. The free guide aims to empower women to invest their money confidently, and, ultimately, to take control of their financial futures.
“There is a gender investing gap in this country,” Sallie Krawcheck, co-founder and CEO of Ellevest, tells Bustle. “Women don’t invest as much as men do, and it costs [them] hundreds of thousands, in some cases, millions, over the course of their lives.” That cost, she says, is “life changing.” Women now control 51 percent of personal wealth in the United States — a staggering $14 trillion — according to a 2015 study by the Bank of Montreal's Wealth Institute. And yet, despite these resources, women still lag far behind men when it comes to retirement savings and income. In retirement, the gender pay gap between men and women widens to 44 percent, and, by the time they hit 75, women are twice as likely as their male peers to live in poverty. While there are a number of factors that contribute to women’s lower lifetime earnings than men — such as “the motherhood penalty” and unconscious bias in the workplace — one issue is that women tend to invest less than men do, which in turn prevents them from getting everything they can out of the money that they do have.
There are a number of barriers that prevent women from investing. “Women have been told that we’re too risk averse to invest. Women have been told we don’t have enough money to invest because of some of the minimums of the investing firms out there,” Krawcheck says. She suggests that women are also turned away from investing by the fact that the vast majority of financial advisors are men with an average age of 50, as well as the investment world’s heavy use of jargon. Krawcheck says that though many women blame themselves for not investing, the real reason for the investing gap is simply that “the industry has not served us very well.”
As in so many things, knowledge is power, and Ellevest’s new microsite seeks to arm readers with clear information and advice about how to grow their cash. For newbies especially, investing can be an intimidating, overwhelming prospect (regardless of gender), but “The Go-Getter’s Guide To Investing” breaks it down into five basic rules of thumb, from how to budget your income to how to choose a financial advisor. There’s also a handy glossary of financial terms.
Krawcheck emphasizes that it’s never too early to begin investing — and you don’t have to have giant piles of cash available to get started. If you’re worried that you don’t make enough money to invest, or you’re concerned about investing while also paying off student loans and other debts, Krawcheck offers a simple guideline: “The only women who should not be investing are women who have high interest rate debt.” High interest rate debts include credit card debt, automobile loans, and, in select cases, student loan debt. If this is you, the first thing you should do is get the high interest rate debt paid off. Then, Krawcheck tells Bustle, “You want to make investing a habit.”
The Ellevest microsite recommends dividing your income according to a 50/30/20 split. That’s 50 percent for essentials (housing, food, utilities, etc.), 30 percent for fun, and 20 percent for savings and investing. But if you’re someone who can’t spare 20 percent of your salary for savings, you’re not alone — and you can still invest. “Many of young women won’t feel like they can start with 20 percent. So start with one,” Krawcheck says. “… Everybody can do 1 percent of their take-home pay. Have it taken out of your bank account as soon as it’s in so you don’t even notice, and then a couple of months later, take it to 2 percent. Three percent. Four percent. And make it a habit, so that it just comes out of every paycheck.”
The Go-Getter’s Guide To Investing is the brainchild of Ellevest, a digital investing platform built with women in mind (though men can of course use it, too). Ellevest offers investment plans customized to specific financial goals set to specific timelines. So if you want to buy a house in five years, Ellevest will tell you how to do that, and if you want to retire in 35 years, Ellevest will tell you how to do that. However you decide to invest, the most important thing, Krawcheck says, is simply to get started, so that you can take full advantage of “the power of compounding” — that is, the ability of your investments to earn money from the money they’ve already earned.
“Money and investing — and particularly investing — is about the last place in which professional women do not feel in control and knowledgeable and badass,” Krawcheck says. “… Investing has felt out of reach to us, and it has cost us a lot.” She points out that the consequences of that financial loss aren’t only financial — they impact women’s independence, the choices they are able to make, and the way they live their lives. “Women today, we are not equal with men yet, and a good chunk of the reason is because we are not financially equal with men yet. Investing goes some good way to closing that gap.”
You can check out the “The Go-Getters Guide To Investing” here.
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