5 WAYS TO GET YOUR $ RIGHT
by Rachel Scott
In today’s world, women are more educated, more independent, and more successful than ever. According to Schwab, woman control 50% of household wealth and that number is expected to grow rapidly well into the next decade. And still the majority of women tend to leave big financial decisions to their spouse, partner, or parent. Whether you are just starting your career or mid-career it is never too late to get a financial education and it is important that you do to secure YOUR success and YOUR future.
It’s time for women to take a more active role and get more comfortable with making financial decisions.
I know, it’s a busy life.
We are all busy building our careers, caring for our families, and trying to be our best self. We are all supposed to meditate while multitasking to achieve our superwoman status and make it look easy. Just like building your career or your business, it takes time, dedication, and commitment. So add financial literacy to your list of things to conquer and work towards gaining knowledge and comfort about finance and investing. The world of finance and investing can be complicated and overwhelming. There are many options to consider.
Each individual has unique and different circumstances that require customized solutions. It can also be fun and provide a sense of satisfaction when you know you made a sound decision.
Here are a few simple steps to get your financial house in order.
1. Pay Off High Interest Rate Debt
Assess your debts and determine the interest rate on each. Pay off the highest interest rate debt first, then the next, and so on. Most of us have credit cards or a student loan that we are working to pay off. Maintaining balances on high interest rate credit cards or loan works against any financial goal you may set. Many credit cards charge between 18% – 25% APR interest on balances. That interest compounds when you leave a balance racking up more and more dollars in interest payments. Those extra dollars are better off in your pocket working for you than going to the credit card company. It is best to pay off any high interest rate balances first.
2. Max Out Retirement Plan Options
Most companies offer employees the option to participate in a company retirement plan. And many companies offer a match. The easiest and most effective way to build your retirement is to participate in the plan automatically and invest at least enough to get the company match. The match is extra money for your retirement so be sure not to miss out on the match. If your company doesn’t offer a plan you can look to open a Traditional IRA or Roth IRA. If you are an entrepreneur and running your own company, there may also be different options to consider like a 401k or Profit Sharing option. You can easily research the benefits of these accounts on the internet to gain knowledge. Then discuss with your accountant or a financial planner which is best for you. The important part is to systematically contribute to retirement savings as much as you can. The years fly by fast, it is key to put an automatic plan in place and watch it grow.
3. Keep Investing Simple
Now you have a retirement plan.
or some extra money to invest.
What should you do with your money?
If you are new to investing, keep it simple. For most people, a simple 60/40 investment strategy is the way to go. That is 60% in stocks and 40% in bonds. Since 1926, the classic 60/40 portfolio has returned about 8% annually. Online brokers offer a variety of low cost solutions, including exchange traded funds (ETF) or index funds. Most also offer well balanced diversified funds or target date funds that will maintain a 60/40 mix for you. These funds will alter the allocation as you near retirement so you don’t have to make the adjustments. Start simple, build your knowledge and make the decisions that are right for you.
4. Build Your Knowledge
Don’t Be Afraid to Ask Questions!
Asset managers and online brokers are a great place to gain knowledge about investing and to manage accounts. They have great customer service who are there to answer questions and help educate clients. They also offer free webinars and tons of articles on investing. Don’t be afraid to join a webcast or to ask questions. This is your chance to learn and build your investment knowledge. The two largest and most established asset managers in the industry are Vanguard and Black Rock. Both of them are a good resource for gaining investment knowledge and building comfort with investing. Vanguard along with several online brokers like Schwab or Fidelity are also good places to open online accounts.
5. Establish Goals
It’s always good to set a goal. Decide what your financial goal should be and develop a plan to get there. Want to start a vacation fund or a college fund? Want to build your retirement plan? Want to start a new business? Allow yourself to dream big and figure out how to make those dreams come true. Start small, save or invest a small amount every month. It will add up over the long run if you stick with a plan. Just like building your career or your business, it takes time, dedication, and commitment to reach our goals. Start small, achieve your goal, and reward your success. Set another goal, achieve that goal, and celebrate another success. It’s important to set goals and work towards them. It’s equally important to celebrate our accomplishments along the way so we can reflect and see how far we have come. Don’t be afraid to ask questions or seek the help you need from a financial professional. Stay focused on achieving your goal and putting the pieces of the plan in place to reach your goals.
Life, and investing, is about enjoying the journey as much as the destination.
Here’s Rachel’s top picks for getting started + getting your $ right!
A LITTLE BIT ABOUT RACHEL
Rachel Scott is currently a Portfolio Manager at Heller Capital where she is responsible for investment research, generating investment ideas, and co-managing the firms investments including equities, fixed income, real estate, and private investments. She also serves on the Board of the Heller Family Foundation, whose mission is children, education, and entrepreneurship. Outside of Heller Capital, she is proud to serve on the Investment Committee of the Jewish Federation of Northern Jersey and the Executive Advisory Board of Cents-abilty, a non-profit focused on educating and empowering high school students in personal finance. Rachel received her Masters in Public Administration from the School of International & Public Affairs at Columbia University.