How intentional investing can help women succeed
Continued economic uncertainty has given us all good reasons to put off investing
This is especially true for women who were hit harder in the “she-cession” and the mass retreat from the labor market during the pandemic. In the wake of Covid-19, one in four women said they were considering reducing their work hours, moving to part-time, taking a leave of absence, or simply dropping out of the workforce altogether, according to a study published by McKinsey & Co. and Lean In.1
Add to that, the challenge of simply managing life through the rise of inflation, and the recent volatility in the stock market and the potential of a recession this year, it’s not surprising that many women put investing on the back burner.
But getting back to investing is one of the smartest financial moves a woman can make. Historically, investing has been shown to be a powerful tool to building wealth over time. And doing it as early and consistently as possible can make a difference in how much money a woman can accumulate.
With intentional investing, you can choose companies that align with your values and beliefs and will provide a good return on your investment. As a woman, you have the choice to select companies that will not only help you reach your financial goals, but that are good for other women and society as well.
There are basically three components to this type of investing:
- Being intentional about why you’re investing (goals)
- Deciding what you’re investing in (the impact on the world)
- Choosing who you’re investing with (on your own or with a financial professional)
Determining your financial goals is the first part of any intentional investing strategy. This could be buying a home, starting a business, planning for a family, or simply saving for retirement. The point is to start with an idea of where you want your investing dollars to take you.
If the goal is saving for a house, the investing vehicle will need to be safe and liquid — meaning you can access your money at any time without penalty. Examples include high-yield savings or money market accounts. Yes, the savings rates are lower than the stock market, but these types of accounts will still earn more than the national average annual percentage yields on basic savings and interest-bearing checking accounts.2 The same guidelines would apply for funds set aside for starting a business or planning for a family.
Investing for retirement will involve a different agenda because that money will typically have a longer time horizon. Investments in stocks through a mutual fund or ETF will allow you greater potential returns since you’re allowing that money to compound over a longer period of time.
Investing in your beliefs
One of the basic tenets of impact investing is finding companies that align with your beliefs and values. While every company is different, you can find those that focus on benefitting women, the environment, or whatever issues matters most to you. There does not have to be a trade-off between your values and performance. For example, there are mutual funds that take into account whether a company does business with women- or minority-owned firms. Look for funds that include companies with diverse leadership or those that do not include companies that violate child-labor laws or invest in tobacco companies. Think ahead to what your objectives are and what you’re trying to achieve when looking at gender-focused funds.
DIY or financial professional?
Lastly, intentional investing means understanding if you want to invest by yourself or with help. Online services, such as robo-advisors, can help anyone build and maintain an investment portfolio and for less than working with an actual financial professional. Other services can help you find investments that align with your overall goals. There are mutual funds and ETFs that provide exposure to U.S. companies that demonstrate greater gender diversity within senior leadership than other firms within the same sector.
For a woman who has a complex financial position and/or wants guidance building a specific portfolio, it may make sense to work with a financial professional. Investing can initially be intimidating and working with someone who understands your worldview may help you gain the confidence you need to stay in the market even when times are rocky. As a woman, consider working with a female financial professional and in turn, you also help her become successful in what has traditionally been a male-dominated industry.
Whatever investment path you choose it is essential to be consistent. Building wealth takes time and by staying invested in the market — even through turbulent times — women increase the chances of accumulating the money needed to build a strong financial future. Impact investing allows anyone, including women, to know that the chosen investments can help her financial future while making a positive impact on the world.
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1 Women in the Workplace. McKinsey & Co. 2020 https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2020.pdf
2 National Rates and Rate Caps. FDIC. January 18, 2022. https://www.fdic.gov/resources/bankers/national-rates/
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. Please consult an independent legal or financial professional for specific advice about your individual situation.