After taking a finance class in high school, I quickly learned the importance of investing money in the stock market. I began investing my junior year of high school, and I have watched my pot continuously grow bigger over time. I realize that many people have not begun this same journey, especially women. Through this blog, I will explore the reasons why women may not be investing, and the importance of doing so as early as possible.
In a study done by Forbes it was found that only 10 percent of women are currently invested in the stock market, compared to the 23 percent of men that currently are. One of the reasons for this is the wage gap. Women make 80 percent less than men do, so in turn they have to set aside more of their monthly income to invest the same amount as men. Another cause for why women are not investing as much money as men is that they are more conservative with their money. According to Cary Carbonaro, CFP and Managing Director of United Capital of NY, when she tells her clients to have an emergency fund the men say they want to have their emergency fund in the market and women tend to have five times more money in their fund than necessary. “For some reason, women are afraid of losing money, while men seem to be afraid of losing out by not playing the market.” Carbonaro says.
Investing in the stock market and investing early is so important because the more time you have spent investing makes a huge difference. Investments grow using compound interest. This means that if you invest $5,000 and every year the investment grows by 5 percent, after the first year you would have $5,250. This doesn’t seem like that much but the next year you earn 5 percent of $5,250 and so after two years you would have earned $512 by just letting your money sit. If this were to continue for 50 years you would have $57,337. Imagine if you had invested just $5,000 at age 20, by 70 you would have made over $50,000 that you could contribute to your retirement fund. If you had waited to start investing by 10 years your retirement fund would only be about $35,000. Those 10 years make a huge difference.
Obviously every person's story is different. Not everyone has excess money that they can invest, or parents that will encourage them to invest at a young age. But it’s never too late to start, and no matter how much money you invest, it will grow, even if it is just $100 a month.
There are many resources for people looking to start investing. One that is directed towards women is Ellevest. They are a financial company that has workshops and financial coaches to help women get started, as well as plans that can be specifically tailored to you.
Bottom line, investing and investing early in life is incredibly helpful, for women especially, and being able to watch your hard earned money grow right in front of your eyes is also a plus.
Raynor, L. (2021, August 13). Investing is on the rise, but women are left behind. Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2021/08/13/investing-is-on-the-rise-but-women-ar e-being-left-behind/?sh=6ee0559a736c
Goop (n.d.) Why fewer women invest in the financial market-and how to change that. https://goop.com/wellness/career-money/why-fewer-women-invest-in-the-financial-market-and-how-to change-that/
Chatzky, J. (2018, September 25). Why women invest 40 percent less than men (and how we can change that) NBC News.