Women Have Confidence in Everything but Investing: Here's How to Fix That
For decades now, actually centuries, women have been driving change on so many levels—in the workplace, at home, in government, and on social and cultural issues. However, there remains a frontier we have yet to truly conquer or find our footing: investing.
Merrill, a Bank of America Company, has uncovered some very eye-opening data on this front. The company found that while women's confidence in nearly all other financial matters is equal to or greater than men's, when it comes to investing we underestimate ourselves and our capabilities. Only about half of women (52 percent) say they're confident about investing, compared to 68 percent of men. It's also worth noting that failing to invest is the No. 1 financial regret among women surveyed by Merrill.
The time has come to address this insecurity. Investing is not only key to building long-term wealth, but also to allowing women to truly step into their power. On this all-important point, the Merrill report notes: "Today, women's lifelong financial wellness is at a tipping point. Thanks to a seismic shift toward women's growing personal and financial power, they are poised to move into true financial independence, enjoying all the freedom that it brings. Yet there is still a trail left to blaze."
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For those ready to blaze the investing trail, here are tips from leading financial advisors about how to shake that lack of confidence and get started.
Start talking about money
The first step toward gaining financial confidence is to begin simply talking about money. Because (for those who may have missed the memo) the reality is that women absolutely hate doing this. The Merrill report, for instance, found that 61 percent of women would rather discuss their own death than money.
"Many women have grown up with the mindset that money is one of the few hush-hush topics that should be avoided in polite company at all costs. But if you want to be in control of your financial life, overcoming a fear of money is necessary," says Ella Gupta, personal finance ambassador for the money app Greenlight, and a Gen Z personal finance expert who's already blazing her own trail with the publication of her book Gen Z Money $ense: A Personal Finance and Investing Guide ($17.99, Amazon).
Need a little help getting the free-flowing money conversations started? Try establishing your own trusted financial community, suggests Gupta. And use this community to learn from the experiences of other women, and openly exchange tips.
"Community also provides accountability throughout the process. You could even begin an investing club with other women, to discuss ideas and share research into prospective funds or companies," Gupta adds.
Because money taboos loom so large for women, they often fail to invest, and fail to begin saving money earlier in life. Women are simply not taking advantage of critical wealth escalators in the same way that men readily do. If this is to change, women need to work together to eliminate the taboos and talk about investing, says Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America.
"Speak openly and ask questions about investing and personal finance more broadly to friends, families, employers or financial experts," says Sabbia. "Seek input and guidance, and ultimately create a plan for trickier financial moments such as investing. Trusted advice can be what you need to eliminate decision paralysis and move forward."
Take an education-first approach
You may be under the mistaken impression that some of us are simply born with investing know-how and prowess, while others are passed over by the investing fairy during the distribution of such natural talents. That however, is not exactly the case. Investing knowledge has to come from somewhere, says Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America.
"While investing has been made to seem complex, and certainly can be, even women brand-new to investing can successfully get started with an education-first approach," explains Sabbia. "Whether it's personal research, an online class, or seeking expert advice, learn about market fundamentals, including the risk and returns of equity versus bonds."
To build her confidence about getting started, 32-year-old Texas resident Maayan Bobylev began devouring inspirational books on money topics including Smart Women Finish Rich, by David Bach, and Ramit Sethi's I Will Teach You To Be Rich.
Bobylev also worked with a money mindset coach who helped her reprogram limiting beliefs around money and investing.
"After years of being interested in investing but totally overwhelmed about where to start, I finally took the initiative to look for ways to learn," says Bobylev, a mother of three. "I've always known that consumer debt is dumb, but the level of 'avoid debt' advice that I received had always far outweighed any meaningful advice about how to approach investing."
Define your goals and start small
Take the time to really consider and flesh out what you're ultimately hoping to achieve from investing— whether it be a quick return, or to slowly building wealth over time. By establishing concrete end-goals, you'll be better able to develop an overall investment strategy and choose investing vehicles wisely to ensure you're advancing toward what's important to you, advises Sabbia.
"After you've set a goal, break it down into bite-sized benchmarks and get started," Sabbia adds. "The notion of needing to have a lot of money to begin investing is not true. Ease into investing by starting small, even if it's only $20."
Use whatever amount of money you're comfortable with to initially establish an investment account, and then create a plan to systematically continue adding to that account.
"The longer you add money, the more you will see results," continues Sabbia. "The key here is to make regular, consistent contributions to your investment accounts, so you're always making progress toward your target."
Utilize the tools available to you
As you embark on your investing journey, it can be a good idea to get your feet wet by capitalizing on workplace benefits offered by employers, such as investing in 401(k) plans and health savings accounts (HSAs). Both of these financial vehicles are great tools to start building wealth today, that you will be able to rely upon later in life, says Sabbia.
"Women should start savings plans early and maximize contributions to shore up resources for the long-term," says Sabbia.
HSAs are particularly good choice for this because unlike other "use it or lose it" vehicles, HSAs are portable and controllable—meaning you can begin putting money in them now and they can be used to pay for qualified health-care costs well through retirement.
Just get started
Time, of course, is your greatest advantage when it comes to investing and building wealth. It's a fact not lost on Gupta, a Gen Z investing influencer who's hoping to bring about change for women of her generation.
"Compound interest—dubbed the eighth wonder of the world by Albert Einstein—is powerful, and time has a huge impact on your nest egg," says Gupta. "Investing can seem daunting, but once you take the first step it becomes easier."
Which is exactly what 32-year-old Kathy Osborne, owner of Fort Myers, Florida-based public relations agency, kamelPR, did in 2021. She took the plunge and got started.
"Last year was a big year for me—I bought a house, married my husband, got an office, hired part-time employees, and grew my business by three-times after founding it two years ago," says Osborne. "I finally felt like things were heading in the right direction and I knew that I needed to double down on putting the financial infrastructure in place for my future."
Osborne started by pulling together investment categories that appealed to her, read the book, The Psychology of Wealth by Charles Richards, and also levered her business network contacts for educational guidance.
Her first investment was $6,000 in Apple stocks, as well as angel investing in companies she felt were building products she believed in.
"In retrospect, investing has made a huge difference in my view of long-term liquidity," says Osborne now. "There's a sense of security in knowing that at any point, I can sell those stocks at market price (if needed) for cash, or hold, and build it for my future."
The future is at hand
Despite the many headwinds women face, Merrill research has found that young adult women of today are paving the way for future generations and are actually progressing toward financial independence faster than their male counterparts.
Gupta is a prime example of this reality. She started investing at age 10, opened a 401(k) at 14, and published her first book about investing at age 16. If all women apply Gupta's proactive mentality to money, investing and wealth-building—and begin doing so at an early age—the results could be extremely powerful. The good news is that women investors are set up to thrive, concludes Sabbia.
"Women tend to take a longer-term view on finances then men, which gives them a powerful advantage to approach investing in a smart, disciplined, and future-oriented way," she says.
Success stories as inspiration
Need still more inspiration to help guide you along the the path to active investor?
Women across the country made it a priority to start investing in 2020 and 2021, even amid the challenges and economic uncertainty presented by a global pandemic. Each women's story about her turning point or motivation is uniquely compelling, and provides useful tips for those looking for a road map to get started.
Jackie Alvarez, a 34-year-old marketing professional in Los Angeles, California, had always known she should be investing but never did much more than contribute the minimum to her 401k accounts.
The instability caused by an unexpected pivot out of the tourism industry during the early stages of the COVID pandemic made Alvarez realize the importance of having her financial house in order. And when she landed a new job in a more stable industry, Alvarez had the opportunity she needed to start putting her financial plans into action.
Alvarez used the fractional investment app Stash to make her first investments and got started with just $25.
"Stash has a huge financial literacy platform, and it kind of gamifies the investment process, and allows you to start investing with any amount of money," says Alvarez. "It's been so fun to start really watching the market, and make decisions about where to invest."
Once Alvarez began actively investing, the confidence she developed permeated other areas of life as well.
"It sounds a little silly, but once I started there, and saw how accessible it was, investing as a whole became way more accessible and I upped my 401k, doubled down on a separate investment fund through my bank, and started saving more," says Alvarez, who now contributes $100 each month to her Stash account, $200 monthly to a J.P. Morgan account and 12 percent to her salary to a 401K.
For Katherine (Kitty) Cort, a 63-year-old retired special education teacher from Wellesley, Massachusetts, an inheritance received in 2021 provided the means to get started but the desire to be more actively engaged with finances had begun years earlier.
"I've been thinking about this for probably 15-20 years," she explains. "I was always very much a traditional housewife with four kids at home, and never worried about investing. My husband really focused on the money."
In 2021, however, Cort says she realized she needed to be brave and just get started investing on her own. This feeling combined a recent inheritance pushed Cort to take action.
"I thought—'Am I going to just let this money sit in an account? Or am I going to invest a bit so I can pass some money onto my kids?' That really meant a lot to me," explains Cort.
Looking back on that decision, Cort says investing was the best move she has made, for a variety of reasons.
"Investing makes me feel proud of myself for taking this leap, and not being intimidated by a lack of economic knowledge of how our world works," says Cort. "Learning about investing has given me confidence."
