Smart, successful women are failing when it comes to investing

Columnists

If you are a successful woman, chances are you have done everything in your power including education, mentorship, and hard work to advance your career and ensure your future. It’s a shame that work ethic hasn’t been put into one of the most important securities of your future – your investments.

With over two thirds of British women (64%) not having any investments at all, it’s more than likely you fall into the category of failing when it comes to your future financial freedom.

Investments outperform savings in the long term, fact. Therefore, if you aren’t investing, you are not making your money work for you – instead choosing to slog it out with longer hours in the office and fighting the good fight for equal pay. The added bonus of an annual ISA allowance of up to £20,000 means you don’t even pay tax on the money you make; you really can’t afford not to get involved.

Although investments are good for everyone, they are particularly relevant to women who tend to live longer and take more career breaks when raising a family. Women, more than men, need to actively start working towards closing the investment gender gap and yet over 67% say they haven’t even considered investing in stocks and shares.

Now is the time to act.

Here are my top five tips to making your money work as hard and as smart as you do in your career:

  1. An automatic 10%

You shouldn’t be investing what you haven’t spent, you should be spending what you haven’t invested. Make a commitment to yourself to install an automatic transfer with your bank on payday of 10% of your gross salary into an investment pot each and every month. By setting up an automatic payment, there’s no need to dwell that you don’t have money to invest.

  1. Educate yourself

One third (31%) of women claim they are put off investing because it feels ‘too risky’. Put in context, most CEOs of start-ups would say the same thing before they launched their first business but would never look back.

To help reduce anxiety about taking the leap, educate yourself on what types of investments are available and talk to other women who have invested to get a better understanding of what is right for you.

  1. Compound interest is your BFF

Compound interest makes a sum of money grow at a faster rate than simple interest because in addition to earning returns on the money you invest, you also earn returns on those returns at the end of every compounding period, which could be daily, monthly, quarterly or annually.

Put in real terms assuming an 8 percent average annual investment return with only £250 a month, here is what you would accumulate based on the age you started investing:

25 years old: You’ll accumulate £878,570 by age 65

35 years old: You’ll accumulate £375,073 by age 65

45 years old: You’ll accumulate £148,236 by 65

  1. Try my 60:20:20 investment strategy

Diversifying your investment portfolio is the key to mitigating risk, whilst also aiming to capitalise on those higher returns. By putting 60% into a low risk investment, 20% into a medium risk, and 20% into high risk investments you create a healthy investment pot.

With just 20% invested into high risk investments you not only benefit from higher returns, but also enjoy more engagement by being involved with exciting asset classes such as crowdfunding and peer-to-peer lending with The Money Platform.  There are also great investment apps like dabbl which allow you to take pictures of the things you like on your mobile phone and invest into them in real-time.

  1. Be like Nike and Just Do It

You don’t need thousands to invest and it doesn’t have to be hard work – you can start investing with just £1. There are also many online platforms including ones tailored to women such as Ellevest so you can get started today.

So rather than waiting around and missing out on compound interest rates, tax free earnings, and higher returns compared to savings accounts, get in the game and become as ballsy with your earnings as you are in the boardroom.

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