“You don’t save your way to wealth, you invest your way to wealth.” Janda Becanda (The Widow Jokes Podcast) episode on cryptocurrency.
Following up on my post about financial freedom for women is this post on investing for women. What’s the idea behind investing? The quote above sums it best. Once you have stable finances (paid off your debts, set up an emergency fund, you have an active insurance) then and only then would it be a good time to start considering investing. The philosophy behind it is that the money you save up decreases in value over time due to inflation rates. Thus the best way to grow your money is by spending it on sound investments.
Sadly, most women lack confidence in investing in comparison to men. However, despite less women investing, studies actually show that the women who invest are outperforming the men who are investing.
My Approach As a Newbie
For me, I approached it this way: investing, like everything else in life, is a habit. If it’s a habit, that means everyone can learn it and manage the ropes well to benefit themselves. I started my investing attempts late 2019 and I won’t say I’m an expert – not at all. I’m still a newbie. But what I want to share are some tips on how to start investing. Because, the best time to start investing is as soon as possible – the longer the time you have, the better your chances are.
First, talk to a trusted financial advisor. Find someone who is well along their investing journey and ask them to share their basic philosophies. How do they make their decisions? What books / journals / blogs did they read? Maybe they listen to some great podcasts. Educate yourself on the topic, and make yourself more financially literate.
Second, try to understand your appetite for risk. Do you like risks? Or do you prefer something safer? Would you be ready if that bit that you invested suddenly loses value during a market recession?
Third, diversify. Don’t have all your eggs in one basket. Spread out your investments into several different sectors (research beforehand never hurts). That way when one sector sinks, the others can still help balance your portfolio. This happened for me in the pandemic. Most of my stocks were bleeding except an investment I made on forex trading in 2019. Phew.
Fourth, don’t wait to invest. Start with as small as 10 USD, but get yourself into the habit of it and let time work for your favor, instead of for your demise.