Investing for women: what you need to know

The wage gap between men and women remains high. According to a report from Human Rights Watch, more women have quit the job market during this pandemic than men. 

"Of the 1.1 million people who left between August and September, over 800,000 were women. Experts suggest that due to the persistent gender earnings gap across spouses and the increase in caregiving burden, women were more likely to drop out of the labor force as schools and childcare centers closed", they reported.  

Those numbers are just a small fraction of the challenges women can face during their lives, which drive females to poverty as elderlies or after a divorce. 

There is no manual or recipe for investing, but there are habits that, cultivated over time, will bring us closer to our financial dreams. You can invest  over time for your independence without sacrificing the present.

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Get organized and know what your goals are

If you want to start investing, organizing your financial life is the first step. If you invest while paying heavy interest on your credit card, it is equivalent to canceling your earnings. Make a list of your income (salary and other sources of income) and all your expenses (including those paid by credit card). 

Take an X-ray of your finances. Analyze where the biggest expenses are, and what can be reduced or even eliminated if it's unnecessary. Make sure everything is in order.

When investing, you should also know your goals. Want to buy something, travel, reach a certain income to retire, help your family? Know the cost of your goals. This clarity of why we invest makes the practice more stimulating and helps maintain discipline.

Whatever your occupation, income, or standard of living, be clear about your goal. 

What would happen if you stopped earning income today? How long can money invested in the past support your current living standards or what you want to have in the future?

I know professionals with a high living standard who invest poorly or don't invest at all. As a result, as people age, they become less willing and energetic to work at the same pace and, consequently, end up losing their living standard.

Ask yourself: What is my life goal? Will my living standard remain the same if I don't have the same health or energy to work? How do I feel about the income I have today? What can I do if not?

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Your first investment

When investing, some mistakes must be avoided if one wants to achieve financial independence. Anyone's first investment should be in an emergency reserve fund.

You should have at least three months' worth of living expenses in your emergency fund. If possible, it must cover at least 12 months, but you should start small.

For example, a $3k monthly living cost requires at least a $9K reserve (3 months). This reserve will not be made overnight, but make sure you build it as quickly as possible.

Set aside 20% of your income every month for investments. If you cannot begin with 20%, start with 5%. Start somewhere.

Independent contractors, whose incomes can vary, should have a reserve of at least six months. Make an average of how much you've earned over the past 12 months and how much you've spent.

There are some precautions for your reserve emergency fund. Do not invest it in shares or long-term CDs (Certificates of Deposit). It should also not be in an investment with a withdrawal penalty or high tax for cashing out.

The best option for you would probably be a separate savings account or money market account, depending on the interest rate, minimum balance, etc.

Is it necessary to invest every month? When it comes to investing, there is no rule. It means that investing every month is not necessary, but you should. The sooner you stop wasting money on useless things and put it to work, the better off you will be. 

To develop financial independence, beginners must maintain discipline, frequency, and set clear goals. 

We are living longer, getting more opportunities, but we are still far from being financially independent. The future of women can be even more challenging than the future of men for a variety of reasons, we know that! No matter how bad your finances or your history with money may be, securing our future through action today is an act of self-love. You can do it!