A recent article in the Huffington Post got me thinking about women and investing. More specifically, it got me thinking about why are women afraid to invest?
Also, I read a lot of personal finance blogs. A lot.
And in general sweeping stereotypical terms, one thing I keep noticing is that blogs written by women focus on how to save money, and blogs written by men focus on how to make more money (even though here's a great list of female investors).
Stereotypes aside, I feel this in my own life. Investing was always something I'd do… later. I'm a pro at saving money, an expert at paying off debt, and a savvy shopper. But mention the word investing, and I tune out. Stocks, bonds, indexes? No thanks. Investing is for the pros.
Why Am I – A Woman Afraid To Invest?
I can't say for sure that my gender has something to do with my fear, but I can't say that it doesn't. It's a lack of knowledge that holds me back. Or, at least, lack of knowledge is contributing to my tentative behavior.
I wasn't afraid to pay off $25,000 in credit card debt. More amazingly, I wasn't afraid to invest in a business by writing a check from my credit card several years ago. But buying stock? Goodness gracious. A balanced fund? This is harder than Calculus in high school, and yet, it matters even more.
Actually, I've Been Investing for Years
The other day, I realized something that should not have been such a revelation. I have an IRA. A login and a password at TD Ameritrade. That means I am already investing. Turns out, putting aside money for retirement is exactly the same as investing real money. The only difference is the time it takes to get it back out. And since I won't be retiring for a long time (longer than I've been alive as of today!), I can be more aggressive in my retirement fund.
I think it's easy to get scared about investing. Even since that realization a few weeks ago, I haven't done more research as to where I should be putting my money for my golden years.
Reasons to Fear Investing
TD Ameritrade's Website. You have to learn an entirely new set of investing jargon to be able to do anything at TD Ameritrade. Here's a fun story (which, actually, probably saved me money in the long run). From 2006 to 2010, I'd been diligently auto-depositing $200 a month into an IRA. This was my “ostrich period” so I didn't even notice that the money was leaving my account. I'd get email confirmations from them, but the language didn't seem to shout, “Thanks for putting another $200 into your IRA!” so they would hardly register. Then, when I decided to get serious (better late than never!) I started inputting all my accounts into Mint.
Mint said, “hey, are you sure that you don't have any investments? Like TD Ameritrade?”
Lo and behold, I logged into my TD Ameritrade account, and saw something like $10,000 sitting there. In my sweep account.
At the time, it was a fortune and I thought that I'd hit the jackpot. I was also thankful that I'd chosen a traditional rather than a Roth, because I would have been so tempted to pull that out of a Roth and right into the 23% interest credit card debt. For a boneheaded move, this one was looking like it was okay!
Also, the fund I thought I was depositing straight into lost 40% of its value between 2006 and 2008, so even though I was earning nothing (less than nothing if you think about inflation!) I didn't lose money.
It's Not a Guarantee. Paying off debt, of any kind, at any interest rate, gives you a guaranteed x% return on investment. Absolutely nothing else is guaranteed. That's terrifying, but also somehow liberating, because if you're not afraid of losing money, you have much more to gain. I think that when you come from a place where you did lose money, you're more afraid to lose it. It's much more challenging to pick stocks, or even pick funds, than it is to shop at secondhand stores.
I'm afraid of big losses, so I settle for tiny wins.
Reason to Embrace Investing Anyway
There are people who make enough money on the interest of their investments so that they (and their children and their children's children) never have to work again. Frugality helps you live within your means, but investing will expand your means.
And if you're stuck like I am and want someone to hold your hand as you start to consider opening your first account and start investing, check out The College Investor's Investing 101 Course.
How did you do it? Are you afraid of investing?