Spreading the Good Word of Investing for Millennials & Ladies, One Link at a Time
Recently, I’ve become a bit of an investing evangelical. I’ve caught myself asking the people (especially mid-20’s women) in my life if they have “heard the good word of index funds?” It honestly usually leads to a really interesting conversation, but when they inevitably ask for some follow-up resources, all I’ve had on hand is a smattering of bookmarks and videos saved on Pinterest. As I haven’t found an investing ‘bible’ to use for my evangelism, I wanted to collate some of the resources and stats that I have found incredibly helpful in my personal financial growth. While my knowledge is admittedly limited, and I’m self-aware newb, I hope some part of this is helpful to someone out there.
Start at the start — a swift statistic kick in the ass
The investing seed was planted in my brain by Sallie Krawcheck, who I heard for the first time on Girlboss Radio.
She used one example in particular that kicked my ass into gear. If you’re making $85K a year and putting 20% of your income in the bank, you will be losing out on $1.1 million or more over the next 40 years. If that feels far away, you can also consider that if you’re making that kind of bank and waiting 10 years to invest, you could be losing out on about $100 every day.
Holy shit. Not ideal.
This is only exasperated by the fact that women live longer, hit a salary ceiling earlier than men, and are generally not as privy to the jargon that is used in investing. My first thought after this truth-bomb was, “okay, it’s time to do some research and learn as much as I can about this. I don’t want to be throwing my hard-earned money down the drain.”
After months of research, I saw this little nugget:
“ A mistake that we’ve seen women make is that we think we need to understand everything about investing before we begin. (I had one woman tell me she was going to take off two weeks over the summer to figure it all out.) But what happens too often is that we don’t feel like we know enough, and so we don’t invest”
- Sallie Krawcheck, Mind the Gap
That was exactly what I had been doing, for months.
So after that smack upside the financial head, I decided to just jump in.
Obviously it wasn’t an Indiana Jones style leap of faith — I had literally been reading up on investment in my free time and having conversations with friends who had started out earlier than me for months.
So! Here are the tidbits I found the most helpful in learning about investing and feeling confident in my choice to test the water, augmented by some great videos I’ve found (and some a high school friend of mine has made!) along the way.
Jargon sucks so here are some basic definitions
- Bond: When the government or a corporation needs to raise money for infrastructure, etc. it does so by selling bonds to the public. If you buy a bond, at the end of the bond’s duration you’ll get paid back the full value (or “principal”) plus interest. Bonds are safer than stocks, but have lower earning potential.
- Index fund: An index is a group of stocks within a specific section of the market, like the S&P 500 (made up of 500 of America’s largest stocks). Instead of buying each of these stocks individually, you can use a brokerage firm to invest in an index fund. Buying a share of an index fund gives you exposure to a sector of the market.
- Mutual fund: This is a ready-made portfolio of stocks and bonds that is a communal investment (a bunch of people pay into the fund to pool their buying power) and relatively easy to maintain. Mutual funds are operated by money managers, who shuffle assets to try for the biggest profits.
- Exchange-traded fund: This is like a mutual fund, but it can be D.I.Y. (no manager needed) and traded like a stock. You’ll get exposure to stocks in multiple industries, like technology and energy, by buying just one ETF.
All the honeys, who makin’ money
Throw your hands up at these motivational, educational resources:
Listen to the full episode here: Ellevest co-founder Sallie Krawcheck is motivated by a powerful and unsettling fact…www.forbes.com
The first finance book I ever red was Nicole Lapin’s Rich Bitch. There’s a short chapter on investing, but I found it a great starting point for clarifying where I needed to be at financially in order to responsibly consider investing. She conveniently has summed it up pretty neatly in this video for Entrepreneur.
Rich Bitch has 883 ratings and 112 reviews. Maxine said: I was a bit surprised at how much I enjoyed this personal…www.goodreads.com
What is a Robo-Advisor?
Robo-advisors are a class of financial advisor that provide financial advice or Investment management online with moderate to minimal human intervention. They provide digital financial advice based on mathematical rules or algorithms. These algorithms are executed by software and thus financial advice do not require a human advisor. The software utilizes its algorithms to automatically allocate, manage and optimize clients’ assets.
Basically, it’s a tool to apply the concept of ‘set it and forget it’ to your investments.
Fembots: Robo-Advisors targeting the Ladies
Ellevest: I would invest through Ellevest in a heartbeat if it wasn’t American-only. As someone who already has to deal with taxation in two different countries, I don’t even want to think about adding a third. In addition to charging only 0.5% in fees and being a fiduciary, Ellevest puts together bespoke investing plans based on your goals. What is Goal-Based Investing Anyway? It’s something you should consider applying to your investment methodology no matter where or how you choose to invest.
Daily Worth used to be affiliated with a robo-advisor called WorthFM, which has closed up shop as of this month. But there’s still some great information on the Daily Worth site like this Beginner’s Guide to Investing.
10/27/2017 1:30AM Sallie Krawcheck, CEO of Ellevest, discusses the new wave of financial feminism, closing the gender…www.wsj.com
Robo-Advisors for the true north strong and financially free
Full disclosure: I use WealthSimple, and if you register off my little link, I get a few more $ managed for free.
WealthSimple is available in Canada, the US, and the UK, and that Canadian availability is honestly the number one reason why I use it. I would love to use Ellevest if I could, but WealthSimple is just fine and has been a great experience for me thus far. The experience I’ve had with the customer service team has been great, the app is clean and easy to use, the magazine is alright, and I feel like I have great visibility over my money and my allocation.
If you’re a Globe & Mail subscriber (or have access to your parent’s subscription) Rob Carrick’s Robo-Advisor breakdown is far more comprehensive than I’ll ever be:
GLOBE INVESTOR Find out which firms deserve your business It's time to stop treating robo-advisers as a novelty and…www.theglobeandmail.com
Aussie, Aussie, Aussie!
Recognizing that the robo-advisor landscape is a little different from country to country, the only Australian options I know of are SixPark, Acorns, Stockspot and Map My Plan. To be honest, all of them (except for SixPark) seem quite expensive in terms of the fees (especially your first $900 with Acorns which is something like 6% — MADNESS.)
This article from the Morning Star breaks down some pros and cons of the latter three quite nicely:
Page 1 of 1 Whether you're completely turned off at the thought of automated financial advice, or keen to give it a try…www.morningstar.com.au
Make like Nike and just do it
Maybe you’re not making $85k per annum and it’s not $100 per day loss for you — maybe it’s only $20 or $50 a day. But would you ever knowingly throw $20 away? No way.
I feel you. It’s a bit scary and being a risk-aware savvy person, you’re potentially a bit trepidatious. However, if you’re in a position to invest (i.e. you’ve got a little somethin’ somethin’ set aside for a rainy day and no credit card debt) and you’re just waiting because you want to research every little thing, I can tell you right now that you won’t. It’s just too boring and there’s too much out there.
Start small if you need to, but jump in, and don’t plan on pulling anything out for a few years. It will literally pay off in the long run (in spite of the inevitable peaks and valleys).