Here’s some great news: Women are investing more than ever. As of 2024, according to Fidelity, 77% of Gen Z women and 74% of Millennials are investing. That’s a sharp increase over historical numbers, which show just 40% of women were investing.
If you’re ready to get started, here’s a friendly guide to help you begin your investing journey.
Choose a good time to start
First, make sure you have an emergency savings account that covers 3-6 months of your living expenses. That cushion is important, so you’re not forced to dip into your investment accounts and sell at a bad time.
Second, make sure you’re paying off your debt – at least the minimum payments, and preferably more. (You do not have to be totally debt-free before you start investing.)
After that, the earlier you start investing, the better. You’ll gain the benefit of compound interest, which makes your money grow faster because it earns “interest on the interest.” Compound interest can turn today’s $5,000 investment into more than $7,300 in 5 years, assuming you earn an average of 8% interest a year. (For comparison, the U.S. stock market has earned 10% on average since 1965).
Set your investment goals
Think about what you want to achieve with your investments. Are you saving for a long-term goal like retirement, or do you have a shorter-term plan such as a down payment on a home? Your goals will influence your investment strategy. For example, if you’re planning for the long term, you might be willing to take on a bit more risk in exchange for potentially higher returns. On the other hand, if your goal is nearer in time, you might choose investments that don’t fluctuate as much. If you have different goals with different time frames, open separate accounts for each.
Choose a brokerage account
A brokerage account is where you’ll buy and sell investments like stocks, bonds, and mutual fund or Exchange Traded Funds (ETFs). When choosing a brokerage firm, consider factors like fees, the friendliness of the web site, and the educational resources they offer. Many reputable firms (e.g., Vanguard, Fidelity, Schwab) offer low- or no-fee accounts that cater to beginners. You don’t need a huge amount of money to get started.
Gather your documents and fund your account
Typically, you’ll need your Social Security number, a form of identification like a driver’s license, and your bank account details for funding the account. The application process is usually simple and can be completed online. After your account is set up, fund it with an amount you’re comfortable investing – even $100 can get you started. Then make small monthly deposits to keep it growing.
Start with low-cost, diverse Investments
It can be overwhelming to try to research and choose individual stocks, so make it easy. Choose one index fund or an ETF that invests in the U.S. stock market as a whole (i.e., the S&P 500). These are low-cost options that automatically spread your money across a lot of stocks, which reduces your risk.
As your account and your knowledge grows, you can always add shares in a couple of individual stocks if you want; just don’t overcomplicate things in the beginning.
Monitor your progress and be patient
Set aside time to look at your account every month or two. Know that your balance will fluctuate up and down as the stock market changes. Stay focused on your investment goals. Keeping your emotions in check and being patient are two of the most important elements to successful investing.
Keep Learning
The more you learn, the more confident you’ll feel about making investment choices. You don’t have to become a financial expert overnight—a basic understanding will go a long way. A few of my favorite resources for financial tips for women:
Join the 70+% of women who are investing early. It doesn’t have to be overwhelming: Pick a good time, set your goals, keep it simple, and learn along the way. Happy investing!