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Love Don’t Pay My Bills: Investing

I have to admit that investing is one of the more opaque realms of the financial world. I’m not totally sure I get it: the stock market – how does that work? (I majored in English, guys. I read cooking magazines and erudite old Russian and French novels. The contemporary world of finance is a brave new one that has such info in’t, but plumbing its depths is a new hobby of mine.)

Not to mention, I have never invested in anything besides blindly behind a very guided 401K I set up with Fidelity earlier this year, which let me do things like tick a box next to “I would like a moderate gain, low-risk portfolio,” or “I would like a high gain, high risk portfolio.” In other words, I have only ever done investing the boneheaded way. And I’m okay with that. But I knew that, in tackling the topic this week, I was going to be a little bit in over my head.

So I crowdsourced. And the findings were grim. Why don’t any of the women in my life have investing advice? It’s not like I only know 20-somethings who’ve never had steady incomes before. I’m blessed with knowing a lot of women from a variety of backgrounds and years of experience, many of them professionally savvy and responsible. But when investment comes up, many of them scratched their heads and say something along the lines of, “I hired someone to do that for me.”

Well, that’s problematic. My DailyWorth guide tells me that rule #1 of investing is The more you pay to manage your investments, the less money you’ll have in the end. Fees, investment commissions, charges, loads, expense ratios: these things chip away at your nest egg. And ladies, we have a longer life expectancy and make about .75 to the dollar. We need that nest egg to stretch a lot further than our gentleman counterparts do.

That said, there’s a lot to lose at stake if you go in for investment without someone savvy guiding you through the process. And as much as we’d all like to be self-trained experts, frankly, this might not be the best arena in which to do it. A lot of the consumer information available on stocks and trading is untimely, skewed toward a particular profiteer’s bias, or just plain misleading. So go for a fee-only advisor or start with a low-fee target date fund to get your feet wet and get started. The Garrett Planning Network is a good place to start.

And finally, DailyWorth says respect inflation, which basically means honey, by the time you need this money, things are going to cost more. It’s about 3% on average of inflation per year, but some things advance more steadily than this. So, choose an investment plan that leans toward growth, while minimizing risk. Again, ask an advisor who doesn’t charge an arm and a leg how best to make this happen for you.

I’d like to add one last thought: it’s widely reported than women tend to be better investors (no, really!) because of one thing: we tend not to bolt the moment things get scary, financially speaking. Our market has definitely had a doozy of a year, and that can be terrifying and make you want to get out while the getting’s good. In the immortal words of Douglas Adams: Don’t Panic. Hang in there, ride the wave, and the market will in all likelihood recover and then some.

So, Persephoneers, what are your stellar investment tips? Outshine my personal cadre of otherwise-brilliant women resources and leave your great tips in the comments!

By Meghan Young Krogh

Meghan had a number of quality writing mentors over the course of her education, which just goes to show that you can't blame the teacher for the way the student turns out. Team Oxford Comma represent.

2 replies on “Love Don’t Pay My Bills: Investing”

When I started college, knowing eventually the real world of adulthood would be knocking at my door, I signed up for a finance class on investing. That class was probably the hardest I took in college, but I got so much out of it. Most of the time I felt out of my element surrounded by econ majors (I was poli sci, Marx and other economic theorist were about as close as I had gotten to financial matters), but I stuck it out until the end of the quarter. I’m no investing expert, but ask me what a P/E ratio or Beta is and I can tell you. Having just a moderate understanding of the stock market and investing has made me confident when I manage my money. I’m only 23 and have already been investing for 2 years, and I’m really proud of this.

I know local community colleges offer similar classes on finance and investing, and I highly recommend them. Even if you don’t actively invest, at least having an idea of what’s going on in your managed 401k gives you peace of mind.

Index ETFs (exchange traded funds) are great for beginning investors because they are a portfolio of assets traded over the stock market rather than one individual stock. Index ETFs in particular are designed to replicate the movement in the market, meaning they aren’t taking lots of risks. They’re low-fee since they aren’t actively managed (like mutual funds), so I recommend them if you’re wanting to test the waters of investing.

As always, do your research or consult a pro before making any big investments. That being said, I think investing and managing your personal finances is far more intimidating than it actually is. If you take the time to learn the fundamentals, it really helps to demystify the stock market.

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