Ladies, this how to invest online guide and resources for investing 101 is for you! The more I read, talk, and learn about how women are not sure how to get started investing, the more I realize we as a community are missing out on a huge piece of the financial pie.
SoFi, an online lender, has done some research into the gender discrepancies in investing. They say, “women hold 71% of all their assets in cash, whereas men hold 60%…Over a 35-year career, that investing gap, combined with the wage gap and other factors, could mean failing to capture $1 million in value.”
$1 million?! Wouldn’t you rather have that extra money in investments that grow over the course of your lifetime than just sitting in cash in your savings account?
The average stock market returns over the last 50 years is nearly 10%. Compare that to the 0% you’d make if you kept your money in a checking account, or maybe 1-2% if you kept it in a high yield savings account.
That’s why learning how to invest online is so critical to us. Without investing, we don’t even have a chance to grow our money, even if it’s a modest amount.
The stock market does not have to be scary or overwhelming, so let’s take a look at a few ways how you can invest in stocks online.
Please note: I do not earn any affiliate fees or commissions for anything I am recommending below. Nor am I a professional investor or banker. This is advice I’ve received and have implemented into my own financial plan and I want to share it with you!
We covered a bit about why you should invest in the stock market above. But to recap, if you’re not investing at least something in the market, you’re leaving money on the table for “future you.” You in 30 years will be thanking younger you for investing back then! Between saving, stock market growth, and compounding interest, investing in the market is going to get you so much farther than just saving cash in the bank.
Therefore, here are a few financial tips I hope can get you started in investing in stocks 101.
You’ve probably heard this one before. And that’s because it’s the best tip out there!
When you invest in employer sponsored plans you set up automatic paycheck withdraws into your retirement account. That’s a big plus if you can’t be sure that you’d save it yourself every month. (Hint: most people won’t).
Employers will also sometimes throw in a small percentage of equal value to what you contribute. That’s free money! So make sure you’re contributing at least the minimum to get that employer match.
There are also tax advantages to signing up for an employer sponsored retirement plan. In short, it lowers your taxable income, so you have a double benefit. You save for your future AND you pay less taxes.
Employer sponsored plans will also typically offer a few date-targeted funds for you to invest in. For example, if you want to retire in 2045, there’s probably a date-targeted fund for that. It will start out more heavily invested in stocks while you’re young, and automatically transition to safer/more stable investments as you age.
Even if you are self-employed or a freelancer, like me, there are retirement plans for you! They are called SEP IRAs (Simplified Employee Pension IRA).
Investing in a company retirement plan or self employed plan is probably the easiest and least stressful way to get started investing.
After maxing out whatever you can on your employer sponsored plan, you should next contribute the maximum you can to another investment, a Roth IRA. Learn more about what a Roth IRA is on Investopedia.
At its most basic, a Roth IRA is an investment account that’s funded with your post-tax dollars. And as long as you meet the income rules (income of less than $139,000 for singles / $206,000 for married couples), you can contribute up to $6,000 a year if you’re under 50 (2020 amount).
You might find it best to use the same investment firm as your employer sponsored plan, just for the ease of seeing all of your accounts at once.
But if you’re looking for a bank to house your new plans, I personally use and love Charles Schwab, and Ken uses Vanguard. Both have low transaction fees, but I find the Schwab interface to be light years ahead in terms of usability.
Once you open and fund the Roth, you can then choose individual stocks to purchase or set up a “robo-advisor” fund. (More info on that in the next section). Individual stocks can include another date-targeted fund, stocks that cover that whole range of the market such as an index fund or ETF.
I can’t tell you what to invest in, but if you’re truly just starting out, many people will suggest robo-advisor funds or stocks which include a wide swath of the S&P 500. Read more about S&P 500 index funds here.
A robo-advisor is an Artificial Intelligence tool many investment companies use to distill data from the stock market and automatically adjust your investments for you.
The AI tool usually quizzes you about your investing goals and sets up a portfolio of funds for you. It balances the portfolio regularly, so all you have to do it really just transfer money into it. If you’re looking for a basic account that can set up how to invest online for you, something like this might be a good fit.
Personally, I use the Charles Schwab robo-advisor called Intelligent Portfolios for some of my investing. It’s very easy to use, has helpful graphs, and allows you to easily transfer in money or set up recurring deposits. You can also take your quiz later on to see if you are still allocated in funds and goals that work for your current life situation.
Pro tip: Most advisors will say that while you’re young you should be invested in more stocks than bonds or cash. This is because your money will grow the most in the stock market over the course of your career. Once you get closer to retirement, your balance in stocks should go down since it is inherently more risky. At that point, you’ll want to transition into bonds and cash, since it has less risk. And you’ll need that money in retirement!
Investing in yourself and your future goals should be a big financial priority. The best steps forward for investing from scratch are employer sponsored retirement plans and a Roth IRA.
I’ve listed two more resources below if you’d like to continue reading about financial planning and getting your goals in order.
Please keep me posted if these tips were helpful to you by leaving a comment below or saying hello on Instagram or Facebook.
One writer who I highly recommend following to learn about investing basics and money management is Nicole Lapin. She started her career as a first-generation American with no knowledge of the stock market. She’s since become an acclaimed journalist, writer, and speaker on personal finance. On her website you can download templates for saving, budgeting, and getting your finances in order.
You should also download the HerMoney Podcast with Jean Chatzky. In this upbeat and thoughtful series, Jean interviews money experts–mostly women who are making their financial goals a reality. They frequently talk about how to invest online and how to get started with financial basics.
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