Every Penny Counts. Invest and Save To Build Your Net Worth!
When it comes to our finance, most of us ladies wonder how to manage it. We think, “is it better to save or to invest?” In truth, it’s both. To achieve money management freedom, you need to have an investment and savings plan. Now is the time to buckle down and learn the importance of financial literacy and ways to multiply your money.
As a millennial woman myself, I’ve seen so many social media trends over the years from how to trim your waist to hacks on “helping” your hair grow faster. Fortunately, these types of patterns don’t last forever because they don’t have a meaningful impact besides focusing on aesthetics. I’ve come to realize more people, especially millennial women, are starting to gravitate towards more self and personal development type of content that helps them in becoming the best versions of themselves in all aspects of life, not just beauty.
Over the years, women have opened up about their finances, career, and debt-free journey on social media platforms like Instagram and YouTube. It seems like more millennial women are starting to realize the importance of financial literacy and ways to succeed in their professional lives. The one issue I see with this particular “trend” is it seems that a good percentage of women think saving and paying off debt is the only way to achieve long term financial freedom.
Sure, paying off debt is by far one of the most critical steps to achieving financial freedom. However, women are not considering the power of investing. As an up and coming Entrepreneur, I’ve connected with many women on social media who focus on the “F.I.R.E” movement: Financial Independence, Retire Early movement. Most of these women are in their mid to late 20’s and have done an excellent job outlining some of the smart ways they have been able to save money and pay off debt. My only concern with this type of online content sharing is that it doesn’t fully highlight the power of investing in individual companies to generate passive income.
In general, most women have put money to the side as a safety net. Yet, when it comes to investing, it’s an unexplored territory. No one likes to risk their money. Trust me…it took me three years after graduating college to invest my first $10K. I know that fear.
However, the reality is that fear about stock market investing comes from not being educated enough about this “system of generating wealth.” Investing is primarily a male-dominated field when you compare the number of men vs. women actively trading daily. The good news is, there are many ways to invest in the stock market, some of which are “less risky” than others.
The easiest way to get started investing is to either open an individual retirement account (i.e., IRA) if you don’t have one with your current employer or open a brokerage account, which is a fancy name for a stock market investing account. Investing via an IRA allows you to fund a certain amount of money each year, which will grow over a long period due to market growth and compound interest. The money you invest today in your IRA will be available for withdrawal once you hit 65, which is the typical retiring age in the United States.
It is an excellent option for ladies who tend to tap into savings once in a while; with this option, your money is technically 100% off-limits unless you want to pay additional taxes and fees for withdrawing a portion earlier.
The second option which I currently follow is investing through an individual brokerage account. This option gives me the freedom to spend as little or as much as I want, and I also can withdraw profits I make instantly. It is an excellent way to invest if you’re someone who wants to have access to additional income throughout the year.
However, the easiest way to guarantee a return on investment when focusing on stock market investing is to invest in ETFs (Exchange Trade Funds) or Mutual Funds. This investing option encompasses a collection of stocks. If you are just getting started with your investing journey, investing in individual stocks can be challenging because it requires research and graph analysis to ensure you’re making a good investment in a company.
My advice for first-time investors is to look at ways to invest in a group of stocks that are automatically bundled and can manage your money (i.e., ETF & Mutual Fund as described above). These types of investing options are available on traditional investment platforms online. I invest using the E-Trade platform, which you sign-up for and access via a computer.
If you want to see your money double over the years, investing is the way to go! You also do not need thousands of dollars to start investing. You can start investing with just $20 per week, which is equivalent to $60 per month!
On average, the year-to-date return on investment in the stock market is anywhere between 7%-10%, and the average rate of inflation is 2%. In other words, inflation is simply the decrease in purchasing power and an increase in prices. For example, in 1970, a cup of coffee was $0.25, today, a cup of coffee at your favorite coffee shop is minimum +$1.75. Moreover, without complicated math, you can already see your money could theoretically grow substantially in just one year by investing in the stock market.
As women, it is essential to have financial security so that we don’t find ourselves depending on other people. There is nothing more empowering than making and having our own money. It gives us the freedom to have full control of our lives.
As a daughter of immigrant parents, I was taught from a young age to save every penny I could. This mindset of saving ‘every dollar’ is so typical in Hispanic culture.
However, the fact is that saving every dollar does not lead to guaranteed financial freedom. The bottom line is, establishing a savings and investing plan is what will subsequently help increase net worth and long-term wealth. Women, we are making history in this country! It’s so important to take advantage of the power we have within us. Women are becoming more critical drivers of income and wealth, and we need to start maximizing our earning potential by tapping into investing opportunities.
Investing and having your own money is the only way to continue living a fulfilling life free from dependence. We have the power to change our lives, and it starts with the steps we take today to build a better financial future for ourselves.