So I’m Ready To Start Investing My Money — Now What?


As a millennial who experienced the 2008 financial crisis during my formative years, I learned to put very little faith in the economy. Case in point: When I begrudgingly set up a 401(k) at my full-time job, I signed up for a plan with a very low contribution, wondering if that money would even exist when I turned 66. Years later, my less-than-stellar attitude toward investing my money is reflected in my account balance: That same 401(k) currently only holds enough money for me to live conservatively for approximately two-and-a-half months.

I’m not telling you about my distrust in the system because I'm proud of it, but rather because my point of view might sound familiar to you or your friends. In fact, I know I’m not alone. Millennial investors may be more risk-averse as a generation, according to a June 2018 publication by Vanguard, meaning the time to take control of our financial future is now. Knowing that women are no strangers to ambition — we bring it to our job interviews, our pay negotiations, and all of our hard-sought life goals — Bustle partnered with Vanguard to provide readers with expert-backed, step-by-step info that helps you bring that same level of ambition to your investment journey. If you’re considering a life that doesn’t include full-time employment as a senior citizen, read on to learn from women who have done their research and can help you start your own investment journey.

First Up, Do Some Homework

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Your first question might be when should you start investing, and the answer is pretty straightforward: Ideally, women should start investing as soon as they begin earning income, says Lauren Wybar, CFP, a senior financial adviser at Vanguard. “Even if it’s just a tiny amount; it doesn’t have to be a lot, especially if you’re paying off student debt,” Wybar says. “It doesn’t take much — the compounding growth can be unbelievable.”

When it comes to actually getting started with investing, a good first step for making sense of your options is simply to do some research. “You have to educate yourself,” says Erin Lowry, founder of the website Broke Millennial. “The most intimidating part of investing is the fact that the language that gets used is often completely foreign to us.”

Luckily, there are tons of helpful free lessons on Vanguard’s website. Not sure why you should start a retirement plan? Vanguard’s got a lesson for that. What about tackling college debt? There's a step-by-step tutorial on that, too. Plus, there are tons of free calculators, tools, and even a glossary of important investing terms to learn — all of which make it easier to figure out an investment strategy that works for you.

Next, Create A Reasonable Budget

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If you’ve never invested before, you’re probably thinking, “I don’t have any money to invest.” Fortunately, you don’t need to be rich to be an investor; how do you think some folks created their net worth in the first place?

“For women starting out, don't worry about investing huge amounts just yet,” says Berna Anat, creator of the financial advice site Hey Berna. In fact, all you need to get started is a reasonable monthly budget that’s both realistic and sustainable. To create this budget, tally up every recurring monthly payment you have including things like rent, utilities, groceries, transportation, living expenses, contributing to savings, and debt repayments. Then with the amount of income you have left, decide how much of that money you're comfortable investing, but don't forget: You’re in this for the long haul, so set aside enough money for an occasional date night or brunch with friends. From there, you can set clear and simple goals to start your investment journey.

Make A Retirement Plan Your Top Priority

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Fun fact: If you have a retirement plan, you’re already an investor. “We often don't think of ourselves as investors, especially because the common language used is ‘save for retirement.’ You are investing for retirement,” says Lowry. And even though retirement may feel like a far-off goal, it still deserves some present-day attention.

Common options for retirement accounts are individual retirement accounts (IRAs) — which are definitely worth looking into — and the employer-sponsored 401(k), which your employer's human resources department or benefits representative should be able to provide you with more info on. Some employers offer a contribution match, and in case you're thinking that sounds like free money, that's because it sort of is — and boy, can it pay off.

“Start investing early and you could wake up at 40 with almost $1 million in your 401(k),” says Kathryn Cicoletti, founder of Ms. Cheat Sheet.

Learn About Diversification And Make It Your Friend

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Here’s a fun term: Diversification. You know the old adage about not putting all of your eggs in one basket? Well, you really don’t want to do that if you’re investing. Just think: You're going to want to have backups if one of your investments tanks, and that's where diversification comes into play.

Diversification is the strategy of investing in different asset classes and among the securities of many issuers, all in an attempt to lower your overall investment risk. In other words? You don't want every investment you make to act similarly. For example, putting all of your investments into the tech industry could be risky, but spreading them out among different industries would diversify your assets and lower your overall risk.

Not sure where to start? Paula Pant of Afford Anything recommends passively managed accounts, such as an index fund or ETF. “Don't over-complicate it, especially as a beginner,” Pant says. “If you've never cooked before, you don't start by trying to sous vide something; you start with some spaghetti and some sauce, maybe a salad.” The same strategy applies when investing in index funds: They're a low-cost investment strategy where a fund follows along a specific market benchmark (also known as an index), rather than the fund trying to outperform. Less risk means potentially less reward, but it’s a smart choice for novices looking to diversify.

Index funds may not sound super sexy, but they're a smarter approach compared to other common tactics like purchasing stock in a company you love. “Literally, the CEO [of that company] can tweet something racist, and there goes your money,” says Anat. “Purchasing global index funds, which is like investing in the entire global market at once, are a much safer bet."

Don't Be Afraid Of Taking Risks

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At the end of the day, investing is about taking measured risks, and you need to feel comfortable with that. If an initial public offering of a hot new stock is calling your name, follow your bliss and broaden your portfolio — just make sure to do your research.

And if living through the 2008 financial crisis still lingers in your mind, know that caution can be on your side when it comes to managing finances. “I think that recency bias and really only having that understanding of the market takes a toll, and is somewhat emphasized out of proportion to reality,” Wybar says. “If you look at the 1990s, it was a completely different world, and the last 10 years have been phenomenal for growth.”

Plus, being careful may be beneficial, particularly when it comes to managing your personal finances, Wybar says.

“It can work in your favor if you’re cautious in a way that relates to your budget and what you’re spending,” says Wybar. “But as far as investments go, the sooner you do that, the more growth potential you have, and the better off you are.”

This post is sponsored by Vanguard.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

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