Let’s begin this discussion with a simple illustration. Women think of money as a pond, men view it as a river. Women believe that the money they have currently is all they will ever have, men see it as ever replenishing itself. This belief leads women to hold excess dollars in a savings or money market account. We’ve talked already about the fact that women earn less, live longer, and have a smaller Social Security benefit. We have to make up some of that shortfall with growth investments. Once you have your short-term needs covered, and are looking for retirement dollars, consider this quote from Benjamin Graham, “Successful investing is about managing risk, not avoiding it.”
When it comes to investing, slow and steady wins the race. Don’t be looking for the next hot stock tip, invest in index funds and ETFs. Cost does matter. This past year, I’ve had several clients get on the Robinhood bandwagon investing in penny stocks. What I tell clients is to invest no more than they would take to Las Vegas to gamble. Never gamble with your serious money.
The next thing to consider is asset allocation. There are few times in the stock market when all areas are up or down at the same time. Small-company stocks haven’t done all that well in recent years, but they are experiencing growth currently. Remember that not all stocks are created equally, and there are a lot of different types of stocks. Large company, small company, growth, value, international, emerging markets…and then we move onto bonds.
You can educate yourself and do it by yourself or engage an advisor to assist you.