Smart Women Love Money: 5 Simple, Life-Changing Rules of Investing
Alice Finn is a wealth management expert, featured by CNBC and recognized by Bloomberg, so her book naturally focuses on investing to build the wealth needed for a financially independent life. Reports suggest that two-thirds of women will have to independently manage their finances and those of their family. Yet studies show that most women have little or no confidence in their ability to invest, or even any interest in investing. Alice Finn makes an effort to correct that in this book.
The book emphasizes five fundamental principles:
- Invest in stocks for the long run;
- Allocate your assets;
- Implement using index funds;
- Re-balance regularly; and
- Keep fees low.
A myriad of factors cause women to earn less than men over a lifetime, making it all the more imperative that we make the money we do have work for us as much as possible. And here’s a reality check: as many as nine out of ten of us will have to manage our finances and those of our family at some point in our lives. And a lot of us think that means keeping our money “safe” in savings accounts, and not investing it. But not doing so has an opportunity cost that will lead to opportunities lost — the ability to pay for a college education, own a home, change careers to pursue a dream, or retire.
Culture dictates that “money is the root of all evil” and as such the love of money is a detested trait most especially for women who are thus labelled materialistic. It is possible to love money without being corrupted by it therefore, in planning for retirement, women must learn to love money. Just as women have to nurture relationships with friends and family, it is also important to nurture money. This is the basis for this book.
Invest in Stocks for the Long Run
The first principle in the book covers arguably the best way to grow your wealth over the long term: investing in the stock market. Beginners can get started by investing in carefully selected high-performing Stocks on Wealth.ng.
Although the stock market seems scary and intimidating for beginners, Alice illustrates the greater risk of not investing in stocks. Basically, if you invest in stocks, there’s a chance for massive rewards and a slight chance that you end up with less. However, if you invest only in the “safe” government bonds or treasury bills or you decide to just leave your money in a regular savings account, your money is certainly going to have less value at the age of retirement. This is due to the ever rising rates of inflation and other economic factors.
Throughout this section, Alice also explains the technical terms associated with investing including: inflation, mutual fund, and bonds.
Allocate Your Assets
How do you allocate your investments between Stocks, Savings, Bonds and so on? Alice Finn explains this in detail in this section. She recommends that you first have an emergency fund that is in a safe place, such as a government-backed fund like Treasury Bills. Then, you need to understand the different investment asset classes (stocks, fixed income, bonds, and alternative investments such as agriculture, real estate and so on).
According to your age bracket, she recommends a few allocation types. For example, people between 30 -40 years old should be less conservative about their investments.
Implement Using Index Funds
On this point, Alice tries to guide the reader on how to identify what vehicle they should invest in, namely index funds.
An index fund, she explains, is a fund “designed to track a particular market index,” such as the S&P 500. Over the long-term, she notes, they often match or beat funds that are managed by actual humans (referred to as actively-managed funds). In addition, they are less costly to own than such funds.
Re-balance Regularly
This section explains the need to reallocate assets based on market conditions. If you want to continue to implement the investment strategy you identified earlier, you will need to occasionally go in and sell assets from one category to buy assets from another category.
She recommends balancing assets to favor tax advantaged investments such as the now defunct Voluntary Pension Contribution in Nigeria or IRA and 401k in the US.
Keep Fees Low
Uncover hidden fees so you don’t lose half of your wealth…..
It is easy to overlook the charges on transactions or dismiss them as too small to make a difference but even a 1% difference in fees can severely limit how much your investments will grow.
Whether you have ₦10,000, ₦100,000, or more, it’s time to get smart about your money.
Take your first step to investing on Wealth.ng
=======================================
Although we have tried to summarize the key lessons, there is so much more to learn from Alice Finn. You can get your hands on this book on Amazon.
