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The world of investing can seem daunting, particularly when you’re faced with unfamiliar financial jargon and terminology.
Once considered a male-dominated space, investing is becoming increasingly popular among women, with more taking charge of their finances and looking for ways to make their money work harder.
But knowing where to begin can often be the biggest hurdle. To help demystify the process, we spoke to some female financial experts who shared eight essential things they believe every woman should know before embarking on an investing journey.
1. Investing is for everyone
“Many people think that investing is something that only men in suits of a certain stature can do, but this is a myth,” says Angeline Ong, senior technical analyst at investing platform IG.
“Investing is for everyone and everyone has got access to tools these days that can help you get started.”
Don’t let investing terms like “bonds” or “ETFs” intimidate you.
“You can strip out the jargon by making a concerted effort to only follow people online and read articles that explain these investing terms in very plain, simple language. Choose a source that is easy for you to understand,” recommends Ong.
2. Research suggests that women are better investors
“All women should know that research shows that women are better investors than men statistically,” says Zoe Brett, financial planner at EQ Investors.
For example, analysis at Warwick Business School (WBS) found that returns for women investing outperformed men by 1.8 per cent.
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“Researchers suggest that this is mostly because women are more likely pick a diversified portfolio and stick with it, whereas men are much more inclined to go and chase the next big stock,” says Brett.
3. It’s never too late to start
“I often get asked, have I left it too late? I speak to women of all ages and walks of life and I always say that it’s never too late to start,” says Ong. “Whether you start at 14, 24 or 44, it’s still well worth doing.”
Brett agrees and adds: “Starting later does mean that you haven’t got as much time to build these assets, but on the flip side you might have more disposable income later in life to invest. Starting late is much better than not starting at all.”
4. There are tools available now that make investing easier than ever
“Back in the day you would have to fill out long application forms and provide lots of identity documentation to get started, whereas these days you can get started on a banking app,” says Brett.
“Many banking apps will offer you something like a stocks and shares ISA which makes investing so much easier and more accessible.”
A stocks and shares ISA can be a great starting point for long-term investing.
“It’s tax advantage product that allows you to put up to £20,000 in it a year with no income tax and no capital gains tax. All withdrawals are tax-free as well,” says Brett.
She adds that some banking apps will offer you a risk graded model portfolio.
“They might ask you to choose between cautious risk, balanced risk or adventurous,” says Brett.
5. Diversification is key
“Diversification is a really good way of building long-term growth because not all parts of the economy are going to be producing good returns at the same time,” says Brett.
“So, if you’ve got a good diversified portfolio across different sectors, then there should always be something in that portfolio that is doing well for you while the others are maybe a little bit more dormant because of where you are in the economic cycle.”
6. You don’t need lots of money to get started
“People often say that they will only start investing once they get to a saving pot of £5,000 or £10,000, but actually you shouldn’t wait for that,” says Ong.
She recommends starting with small amounts instead.
“You don’t want to put a big amount in and then get shocked or scared by the market and then not want to do it ever again. So, little and often is actually the better way to get started,” advises Ong.
Brett agrees and adds: “Getting into a habit of investing a small amount every month also creates a bit of momentum. Once you start seeing that actually it’s not as big and scary as it sounds, then that can give you the confidence to start investing more and more.”
7. Investing in Exchange-Traded Funds (ETFs) is like ordering tapas
“ETFs can be a great place to start because rather than betting on a single stock it allows you to buy little pieces of lots of different companies which spreads out the risk,” says Ong. “The likelihood is that some will do well, some won’t do well, and it should even out and hopefully provide a stabler return that you can count on.
“It’s like choosing a tapas option at a restaurant where you pay the same amount as a normal main dish but get small tasters of lots of different dishes. The likelihood is that you are going to like some but not others.”
8. Patience is your superpower
“Patience is your superpower. Lots of data shows that if you have the nerve to sit on your hands after you’ve done your homework and have diversified your investments, that tends to put you in a better place than trying to hop on every headline,” says Ong.
“Let the compounding do the heavy lifting for you.”
