The modern woman is evidently becoming more and more independent. She now has complete control over her life, house, and body, decides if and when she wants to get married, is no longer a so-called ‘house-wife’, and, last, but not least, she has financial independence. This area of her freedom brings us to the question – how can women start securing their economic future? While there are multiple answers to it, let’s focus on investing. Therefore, here is your complete ‘investing for beginners’ guide, filled with valuable information and everything you need to know to start investing now!
Women’s Financial Independence History
If we were to take a stroll down the timeline of history together, financial-wise, things look rather bleak for women. Believe it or not, it was only approximately 40 years ago that we truly started to take matters into our own hands and become independent. Apart from that, it was at that time also that we were allowed to do so. Yes, that is the appropriate terminology – ‘allowed’. Because for the best part of our history, women were unquestionably not permitted to handle money or make financial decisions of any kind. But how did we get there?
In Ancient times, women’s rights to dispose of properties and other assets differed from one culture to another. For example, in Ancient Egypt, women were financially equal to men. Consequently, they had the same rights, but they didn’t always exercise them, because of social and status reasons.
In the Jewish communities, women could have property, but not inherit it from their husbands, unless they had no children. Ancient Hinduism allowed women to hold assets as well, inherit, and pass them on, but only before marriage. After that, all they owned become the property of their husband and divorce was not allowed. Ancient Greece was not that liberal. Greek women did not have permission to inherit something or to take legal action in court unless represented by a man.
Moving forward on the historical timeline, we find out that along the lines of the 800s in Europe, women had equal rights to men, up until the 1100s when everything changed. The Anglo-Saxon law forbade women from everything financial-wise. To make a long story short, that went on up until 40 years ago, when women got full rights, the same we have in the modern era.
Seeing this tumultuous history when we were barely allowed to touch even what was theirs rightfully, one might argue that, for women, it has become a common way of thinking to consider it difficult to handle their own finances or become independent altogether. From a mass psychology point of view, one cannot help but notice how thousands of years of forbiddance have led us to think we need to marry or otherwise just to have economic power and strength.
Evidently, that is not true, as there are a lot more things a woman can do to gain her freedom from the money perspective. One of the best ways is investing. If you want to find out how to do it, keep reading.
What Is Investing?
Simply put, investing means allowing your money to work for you instead of you working for your money. There are several ways to trade from which you can choose. They are also called investing vehicles by some. They refer to the fact that you can invest in bonds, stocks, mutual funds or real estate, as only a few examples of the many other assets you have at your disposal.
Evidently, each and every one of these ways of investing has its ups and downs. However, the main idea is for you to choose the one that best suits you, your needs, and goals. Apart from that, you also need to determine the investing way which will render profit on your behalf. This might sound like a simple and redundant idea, but it’s just about the topmost thing you need to remember in this game.
The other crucial thing you must bear in mind is that investing is not gambling. Not even investing for beginners qualifies as gambling, as long as there is a thorough understanding of what you are doing. Trading has acquired a bad reputation for itself. Most people think it’s some sort of gamble in which you put some money in and hope for the best. Also, you almost never see it back. That does, indeed, happen. However, it only happens to people who don’t know what trading is, how it should be done properly, and who don’t do their research prior to starting.
Real investors, like the type we, ladies, are striving to become, don’t just throw in their money over a tip they heard while buying their morning latte. Genuine traders do their homework and always stay on top of the game and the news.
However, there is some risk involved, and that is yet another key point you need to be aware of. Stock markets fluctuate and everything changes depending on current events. If something major is on the news happening to a big company you may or may not have invested in, you can be sure it will affect the entire market and, thusly, your investments. That is one of the reasons why it’s better if you get a broker, at least in the beginning. But more on that later.
Investing is becoming a lifestyle, even investing for beginners. The tradition since the industrial era says everyone needs to work a 9 to 5 job and live off of that income. Modern days find people, especially young ones, not willing to submit to the traditional standard anymore. They are starting to loathe waking up in the morning, having a boss, answering to someone and working at least eight hours per day for a salary which is far less than they would want or need. In other words, people nowadays want freedom from the industrial-era working schedule and monetary independence. This is exactly what us, women, want as well. Investing is the perfect way to achieve all that.
Apart from gaining financial independence, investing is also a great way of making money easily and, most importantly, in a very little time-consuming way. You invest, and while your money works for you, you have all the time in the world to devote yourself to other things. I don’t believe I have to mention how important this is when you’re a woman. Investing may very well be the best way to intertwine money-making with having a family life, tending to your partner, raising your children, and sparing some time for yourself as well.
What Types of Investments Are There?
As mentioned above for all you ‘investing for beginners’ aficionados, there are many types of investments available on the market. However, here are the main ones, in which people usually invest.
This term is a general one, used to define all the securities that are founded on debt. That is because whenever you buy a bond, you are literally lending some of your money to a particular company or to the government itself. What do you get in return? Interest on your money and, at some point, all your money back.
People are traditionally attracted to bonds because they are safe up to a certain degree. For example, if the government you have bought bonds from is a rather stable one, that you will get all your credit back for sure. This security means that bonds classify in the risk-free part of the investing chart. However, if this looks almost too good to be true, that’s because it is, in a manner of speaking. As with everything else, when there is little risk, there is little to win. Bonds yield lower interest rates than other alternatives. Therefore, you have to choose between risk-free and low profit and high-risk but bigger profits.
Keeping to the ‘investing for beginners’ mindset, here is a simple explanation as to what stocks are so that you can understand it easily. When you purchase stocks you actually buy a small part of the company or companies you decided to invest in. You are basically giving the firms money they will then use to expand, buy equipment, pay its workers and all other banking activities. In return, according to the terms you agreed to, that particular company you invested in will give you part of its profits, seeing as you are one of its owners. These profits are called dividends, and they depend on how much you’ve invested.
If bonds were quite stable, stocks tend to be a lot fickler. This is just a pretty term for saying stocks, in fact, fluctuate value-wise every single day. The bad part when it comes to them is that you are guaranteed absolutely nothing upon buying them. For example, there are certain bonds which don’t even issue dividends, which means you won’t get any money back for your investment unless the stocks’ value rises. This might not happen either.
Still, the good thing about stocks is that, unlike bonds, if they do render profit, it’s going to be a major one.
- Mutual Funds
These are collections of stocks and bonds. If you choose to buy a mutual fund, you will become part of a team of investors. Having a team means you will have the chance to pay a professional investor or a broker to choose the best assets to invest in at a given time.
Their primary advantage is that you don’t need experience, time or knowledge to do this, only money. You put the money in and let the professionals handle it all for you. The theory of mutual funds says you are bound to make some profit, solely because a pro is handling your investments. Keep in mind that is not always the case.
This is a type of trading that requires you to purchase investments, rather than stocks, bonds or shares. However, it’s a kind that you will, most likely, need help to pull off, especially if you’re at the ‘investment for beginners’ stage of your trading career.
Are You Ready to Start Investing?
As you might have already noticed, ladies, investing is quite a serious thing to undertake. Therefore, it’s always good to take a step back and think for a while if you are really ready to start investing to become financially independent. Here are a few things you need to take into consideration, as part of our ‘investing for beginners’ short guide.
#1. All your debts need to be in control
As a matter of fact, your debts should be paid off completely before starting on any investment plan. However, we all know that is not always possible. Earnestly, debt might be the very reason you are planning on investing in the first place. Therefore, if you cannot pay them off successfully, make sure you have them under control completely.
#2. Consider retirement
As we progress in these modern times, it is becoming more and more evident that state policies do not have the power to cover our pensions anymore. They do try to pay off some money to us after we retire, but it very well might not be enough to keep up the lifestyle you will grow accustomed to over the years.
Therefore, before you start investing actual money, make sure you contribute to your workplace’s job system. If you are a pension saver, you will benefit from tax breaks that may be very generous, not to mention contributions from your employer.
#3. You will need some savings
As noted above, although it’s clearly not gambling, but it has more of a scientific ring to it, investing can lose you money. Markets fluctuate and, consequently, so will your assets. This fluctuation typically means you will lose some if not all of the money you invested.
Keeping this in mind, it’s always better to have some money saved up in case your scheme fails. In this way, you won’t have to suffer from the loss as much as you would have normally done.
#4. Insurance is the best way to go
Building on the above idea that it’s best to have some money aside in case you lose your investment, insurance is a good way to go as well. Consider the possibility of your never getting the money back as well as not making any profit from your investments, even if you don’t lose in the first place.
Think about a life insurance, a healthy one, and all other additional policies you and your family might benefit from should anything happen.
Investing for Beginners: Tips of the Trade
It’s crucial you do your research so that you have a working knowledge of the system prior to starting. Even so, no matter if you do, there are still tips of the trade you need to know. Here are some of them.
- Set your goals right from the start
One thing that will surely help you along the way is to decide right off the bat for what you are trading. Ask yourself: what will you do with the money? Are you saving to go on a vacation, an early retirement, to start a business or to put your children through college?
Deciding on your goals will give you a sense of how much money you need to invest, how much profit you need to make out of it, what risk are you willing to take, and, last, but surely not least, what assets you need to invest in. In other words, it will help you settle on and create your portfolio, the most important thing in your tool bag when it comes to investing for beginners.
- Do you have a timeframe?
How long do you want to invest? How long do you need to achieve your dreams? Time-wise and as far as investing for beginners goes, there are many questions you can ask yourselves, ladies. Once you’ve managed to answer these time-related questions, you’ll see just how important they really are.
For example, if your timeframe is five years, you are far better off with basic cash savings. The reason is that, if your investments fail, you will not have time to recover before you need that money. Investment is far more appropriate a choice when your goals are long-term. This notion means five to ten years and everything that is above the ten-year mark.
The timeframe is also related to some other factors you need to take into consideration before you start investing, such as age, whether there are any health problems or not, or if you have children or other members of the family which depend on you financially.
- What exactly is your attitude towards risk?
As mentioned before, even though it’s not considered gambling, there is still some risk involved in trading, depending on the assets you’re planning on investing in. Try to figure out what is your attitude towards those levels of risk. Will be able to trade in a laid-back style or is this going to make you lose sleep?
Risk also involves the specific investment way you’re going to embark on. Once you decide just how you feel about taking risks with your money, you can also start choosing the asset you want. When we presented stocks, bonds, and mutual funds, we shed some light on how risky these three options are. Start off by imagining how you’ll feel if you placed your money on each and every one. Which one makes you feel better?
- Go for a broker
This idea essentially means for you to seek some advice from a professional, especially if you’re at the ‘investing for beginners’ stage. It is possible to take the DIY approach to this, but it’s not a good idea if you’re a newbie. Hiring some help will save you from making any mistakes and losing money.
Apart from that, once you get some help, you will be able to discuss every single point we raised above in our ‘investing for beginners’ short guide. The professional broker will make sure that all your investments suit your needs and that you maximize your profits. He will propose strategies, ideas, options, and courses of action which you might not have thought of previously, to win back every penny you invest.
While we’re on the subject, ask your broker to share some advice on a few books you can read on this topic and some online sites you can navigate so that you can start learning. A book will teach you the basics, such as the field terminology, for example. You may also discover websites that offer them in pdf format so that you can be smart and quick about your trading education.
Investing is an easy and fast way for women to secure their financial future, especially in modern times. Investing for beginners, on the other hand, might prove a bit tricky. This is why we’ve created this guide so that you can get a head start on investing in your future!
The above article was researched and written by the editorial staff at WomensWealth.Money.