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Since women have been members of the workforce (for the last few decades), we’ve gained a lot of momentum in our fields which also means that we’ve been making a lot of money on our own. If you’re thinking about investing your money, I’ve got a few tips for you.
#1) It’ll Take Time
The process of building your perfect investment portfolio could take years. So be patient and make sure to do your research.
Check out SigFig. It’s a site where you can sync all of your investment information. From there you can see everything at one place. It also provides you with some friendly tips and advice (what performs better, what’s doing well right now, etc.) It’s like an investment advisor in the form of a cute little piggy (their mascot).
#2) What Are Your Goals?
Assessing your financial goals before you go dive head-first into investing is a good idea. I know that the main goal for everyone is “make lots of money.” That’s a given. But look at your personal, professional, and financial goals for your future. What are you planning on doing with that money?
Are you looking to make money fast so that you can invest in something else? Are you looking to save up for your children’s college tuition (that’s coming up too fast, isn’t it…)?
Are you looking to save some money for after you retire? So that you can buy a condo in Florida and an RV that you can use to drive across the country to see the world’s biggest ball of twine? (Hint: It’s pretty big and it’s located in Cawker City, Kansas.)
#3) Are You Aggressive Or Conservative?
People who put more risk into what they invest in have more aggressive portfolios. These types of portfolios have more equities and less bonds.
If you have a conservative portfolio, you have one with less risk. These types of portfolios carry more fixed income securities in order to protect its value. They carry good long term capital growth but won’t be seeing much action quickly.
If you’re looking to invest for your future (and you’re starting off fairly young), I suggest starting off with a portfolio that leans more toward the conservative side, then venturing off into more adventurous territories if you’re feeling brave and have the extra income.
That being said, conservative portfolios don’t solely hold fixed-income securities. The key to a good investment portfolio is diversification, after all. You want to make sure that you’re hitting different types of investments. A good conservative investment portfolio will probably look like this:
- 70 – 75% Fixed-Income Securities
- 15 – 20% Equities
- 5-15% Cash and Equivalents
While a good aggressive portfolio probably looks something like this:
- 50-55% Equities
- 30 – 40% Fixed-Income Securities
- 10 -15% Cash and Equivalents
Now that I’ve shown you the importance of diversity, let’s talk about a few of the different options that you have…
Just like you choose pets that fit your personality best, choose stocks that fit your personality as well. Remember, you should be looking at: How much time do you have to invest your money? Are you straight out of college or are you newly divorced with children who will be in college in the next five years?
What are you going to do with your money? Is this going to be your only source of income after you retire? Or is this just going to supplement money that you’ve already got for your retirement?
The answers to those questions should determine what kind and which stocks to invest in.
I’ve always compared “watching currency rates” to “watching a horse race”. What’s interesting is that currency is just compared to different currency. Is the American dollar gaining or losing ground against the Canadian dollar?
That means that depending on which and how many ‘currencies’ you are investing in, you could be gaining ground when the American dollar gains and when it loses ground. Pretty interesting, huh?
When you choose bonds you will need to look at five main things:
- Look at the coupon rate (the interest rate on the bond when it was issued)
- Look at the maturity (when will it end and the principal be repaid with the interest)
- Look at what type of bond it is
- Look at its rating (with ‘AAA’ being fantastic to ‘C’ being absolute…junk)
- Look at what the general interest rate environment is
And this is just the tip of the iceberg. Investing your money is a long process. I suggest that you define your goals and head over to an investment advisor.
Now when it comes to advisors, you can go with a few different options but I suggest asking your friends, family, and your coworkers for their recommendations or go to MyFinancialAdvice.com which is pretty much aimed at the middle class. After all, those investment advisors aren’t cheap.