I attended an event at Vanguard’s headquarters where a variety of experts spoke to local bloggers about important financial topics. I’ll be sharing the information I learned at the Family and Finance event, and my own thoughts over the next few weeks.
When we sat down for our first session at Vanguard and Shayna Beck (who oversees social media at Vanguard) asked us to answer a few questions with a sign. One side said women, and one said men.
Who handles the budget and bill paying in the majority of households? Most of us guessed correctly that women control the purse strings.
Who invests better? Getting better returns and sticking to their investment plans? Only two of us guessed correctly–it’s women.
While it may seem surprising to learn that women handle their investments better, it shouldn’t be. When it comes to investing women who invest tend to make a plan and stick to it, often choosing low to moderate risk investments. Their funds remain secure and they earn higher rates of return. Male investors often take more risks with their investments which can lead to losses.
Why don’t women feel confident about investing?
I believe for most of us it’s a matter of not knowing what to do, and where to find help with investment and financial planning decisions. It’s also a tough priority to keep at the front of your to do list when you’re juggling career, relationships, your own needs, and often kid’s schedules and needs on top of all your other priorities.
It doesn’t have to be that way.As women we’re used to juggling multiple goals and priorities, so balancing our major goals with the short-term goals can be easier if we educate ourselves and take action.
You may not become obsessed with financial matters, but taking the first steps to learn more will give you confidence and get you that much closer to your goals.
Where do I start?
The first thing you need to do when it comes to your finances is think about the big goals. Saving for a home, retiring by age 60, traveling the world, or funding college may all be on your financial bucket list. These big life goals will effect everything from your budget to your day to day spending.
Karin Risi has worked at Vanguard for 15 years as an investment analyst and now as head of Advice Services. She shared some advice with us to get started with investing at Vanguard’s Family and Finance event. According to Karin there are 4 areas to focus on when planning and making investments.
Goals-To start you need to lay out your goals. If you have a partner or spouse it’s essential to make these goals together. (find more on money and marriage here)
Goals should be:
- clear and specific (For instance, we want to cover 50% of the cost of our children’s college tuition.)
- include big investment goals (Examples include retirement and college savings.)
- outline a time horizon (When do your kids go to college?)
- include a budget (What can you save each month?)
- include your risk tolerance (Do you prefer low, moderate, or aggressive investments?)
- force goal prioritization (Which goals are the most imporant?)
Balance-Your investments should be diversified, and include the best options for your income level and tax bracket. Don’t concentrate all your risk to one area. Essentially balance can be as simple as saying don’t put all your eggs in one basket.
Cost- How much your investments cost (in fees) is one of the ways you can save and protect your investment money. The less you pay, the more you keep. So pay close attention to fees for your investments, and reduce costs whenever possible.
Discipline- The key to success, discipline simply means sticking with your plan. While life often takes unexpected turns, remaining disciplined will keep you on track for your goals. Stick with your plan, but be sure to keep an eye on your investments and revisit your plan to make sure it’s still meeting your goals.
Should you seek financial advice and help with your decisions?
It’s a matter of how comfortable you are, and how much time you’re willing to put into learning and managing your investments. In most cases talking with a certified financial planner or advisor will help you sort out specifics. Sometimes there is no right answer when you have competing goals, but talking it through can help you sort out what’s the most important to you and your family.
For me the conversation is not new, but it did remind me to check in on our investments and consider other ways I can invest my money (especially my business income) that will not only help us reach our goals faster. It’s definitely time for an annual review in our house. 🙂
More from Vanguard:
Vanguard was built on the DIY approach to investments and in that vein will be launching a Women and Investing series on their blog. While you can do the work yourself if you find you need help consider talking to a financial advisor if you need help or have questions. Vanguard offers a variety of approaches, you can learn more here.
Disclosure: Vanguard invited me to this event and provided me with educational materials, meals, and a gift card to offset travel and child-care expenses. The views and opinions in this post are my own.