Investing your money — when done right — is one of the best ways to manage your money so that it can work for you. It’s also critical for retiring comfortably.
But the markets ups and downs is very often a major deterrent, especially for women, who invest at a much lower rate than men in the US.
I bet you have all heard of the gender gap to some extent. But, what does it means for you?
According to the Global Gender Gap Report, when economists speak of the “gender gap” these days, they usually are referring to systematic differences in the outcomes that men and women achieve in the labor market. These differences are seen in the percentages of men and women in the workforce. It’s also seen in the types of positions they hold, and their relative incomes or hourly wages. So, you know there are inequalities, but do you know on average, how much do these gender gaps cost you?
You may want to brace yourselves for this because the truth is shocking.
That’s because we women live longer, and we retire with two-thirds the money of me. That’s in large part because we’re paid less, and we take more career breaks, but it’s also in part because we invest less, what that’s what we call the gender investing gap.
To help get women investing, former Wall Street executive Sallie Krawcheck launched Ellevest, a digital investing platform that puts investors’ money in low-cost ETFs based on a set of goals, like buying a home, having children, starting a business, and retiring comfortably.
In addition to helping women prioritize their financial goals, Ellevest takes into account the facts of how women’s financial trajectory differs from men: different salary arcs, longer lifespans, and the possibility of extended time off from work for having children and taking care of parents. This female-specificity differentiates the platform from an emerging crop of startup robo-advisors, including Wealthfront and Betterement.
Below, check out the easy (and surprisingly fun) process of setting up an investment account with Ellevest and creating an investment plan.
But, First: What is the Gender Investing Gap?
Simply put, women don’t invest as much as men do. And they don’t invest as early as men do, either. Of all the assets women control—both inside and outside their portfolios—they keep a full 71% in cash, according to a survey by BlackRock, whereas men hold 60%.
And while keeping your money in savings account feels like zero risks, but it also has zero potential to grow as stocks do over time. And even with low inflation, the purchasing power of that cash will decline over time. So the price of certainty you get with cash is high.
Conventional wisdom “blames” women for this gap. From a young age, we receive messages that we’re not as good at math as men; we’re not as good at investing. Um, no. Studies have actually found that once women do invest, they outperform men by nearly one percentage point a year. This was confirmed recently by Fidelity, which analyzed the performance of 8 million retail clients in 2016. Typically women outperform because they don’t overtrade, panic in down markets, or pay too much in fees.
“It’s not about beating the market—it’s about reaching your goals,” says Sylvia Kwan, Chief Investment Officer at Ellevest on the investment approach at Ellevest. And, it doesn’t have to be so complicated. Ellevest was founded on the principles of simplifying and personalizing investing for women⏤and in turn, crushing the gender investment gap.
How to Close the Investing Gap?
This is going to sound a bit like a Nike commercial: Just do it. Start investing today. Find an advisor who feels right for you—and do your research. Ask colleagues, ask friends, and search the Internet.
What if you don’t have much to invest, should you still bother?
Short answer: Yes. Long answer: Hell yes! Ellevest can get you set up in less than 10 minutes so you can reach all of your money goals. Sans judgment, finance jargon, and trust issues. Crisis, averted. Get into it here.*
The Importance of Investing for Women
That’s one reason why I wanted to confront the issue of financial empowerment head-on in Style Salute. American women have successfully avoided candid discussions about money for decades. We go into great detail about our child birth experiences or a great date, but credit card debt? That’s a topic that probably doesn’t come up a lot, even between the closest of girlfriends. Still, nothing will change if we don’t talk about money openly.
When we think about financial empowerment, we’re not just talking about being able to afford the trip to Tulum — no judgement if that’s your goal — more importantly, we’re talking about taking control of every facet of our lives. Because although money buys you freedom and leisure, it also helps determine your health. The first step to feeling better is to eliminate financial insecurity — that means we need to start investing now and take a more active role in managing and planning our finances.
The Bottom Line:
Although there are risks that come with investing your money, there is also the potential for rewards — namely, helping you grow your money so you can meet your financial goals faster than if you had, say, put your money away in a basic savings account. So start today, even if you put away 2% of your income into a 401(k) or an IRA. Your future self will thank you.
For when you don’t have a retirement fund…
Don’t sound the alarm – yet. Ellevest can get you set up in less than 10 minutes so you can reach all of your money goals. Sans judgment, finance jargon, and trust issues. Crisis, averted. Get into it here.*
In search of even more financial wisdom, here are more personal finance topics for you:
The One Money-Habit All Wildly Successful Women Share
The Personal Finance Tips Everyone In Their 20s Should Follow
3 Reasons Why You Need a Roth IRA- Even If You Have a 401(k)
Disclosures: We’re excited to be working with Ellevest to start this conversation about women and money. We receive compensation if you become an Ellevest client.
Questions? We’re here to help. Leave us a comment and we’ll get back to you!
