Estimated reading time: 10 minutes
Ladies, we all want the feeling of financial security and control over our finances. So what’s keeping us from taking an active role in managing our financial future?
If I had to take a stab at it, I would say it’s fear. Most of us fear the unknown. The reason why investing strategies for women look different is that we have a lot of concerns when it comes to caring for our families, managing our future, and figuring out our finances. Most women are extremely busy, and it’s daunting to invest, especially if you’re new to the idea. All those moving pieces may seem overwhelming and even scary.
But we must understand our money and the strategies for investing. Especially when we know it’s an essential step to growing our financial health, enabling us to fulfill our life goals.
Do you ever get those moments when you don’t want to deal with your finances? I know I do. But, don’t put it off. You’ll feel immediate relief when you get financially organized and take control of these investment strategies to secure your future!
Table of Contents
- 5 Investing Strategies for Women Who Want to Prepare for the Future
- Time to Dip in More Than a Toe in Your Financial Future
- Making Cents Count Financial Organizer
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5 Investing Strategies for Women Who Want to Prepare for the Future
While investing and retirement planning aren’t the same, they are certainly two sides of a similar coin. Most of us think “retirement” when we think of investing. After all, retirement is usually the big end goal, right?
So, now it’s time to ask yourself—are you prepared? According to AARP, women worry more than men about having enough for retirement, with 46% of us saying we are “not too confident” or “not at all confident” we have the “right” investment strategies in place.
As a beginner, it’s hard to know where and how to begin investing. As with any great journey, the most challenging part is getting started. With that said, here are the best investment strategies for women who are ready to prepare for retirement (which should be all of us).
1. Employer-Sponsored Qualified Retirement Plans
A retirement plan is something you may already have access to and not even realize it. If you have a 401(k) plan or a 403(b) plan with your current employer, then you have what’s called an employer-sponsored qualified retirement plan.
You may also have a Governmental 457(b) Plan, which also falls under a qualified retirement plan. If you have a retirement plan through your employer, but it isn’t one of the methods mentioned, check out 7 Retirement Plans Explained & What You Need To Know.
If your employer offers a retirement plan, find out if they offer a “company-match.” If so, this is the easiest way to help maximize your retirement savings.
Let’s say your company match is 4%. This means if you contribute 4% (pre-tax) from your paycheck into your retirement account, your company will match your contribution up to your 4% contribution. If you’re contributing 10% into your 401(k), your company will still only contribute up to their 4% match cap. And this, ladies, is what we call FREE MONEY!
2. Individual Retirement Account [IRAs]
If you discover your employer doesn’t offer a retirement plan, or they don’t provide a company match, don’t use it as a reason to avoid investing. There is another investment option for women who don’t use a company retirement plan: open an IRA.
You’ve probably heard of the term “IRA,” which means “Individual Retirement Account.” You’ll continually hear this little acronym “IRA,” but what you also need to know is there are different types of IRAs. Work with your financial advisor to determine which type of IRA is best for your particular situation.
Anyone who is receiving wages, salaries, commissions, and professional fees can establish an IRA. What’s great about having an IRA is even if you are participating in your employer-sponsored qualified retirement plan, you can still establish an IRA as well, though there are restrictions. If you want to boost your retirement savings, an IRA is an excellent method.
As far as IRA restrictions go, if your employer’s retirement plan doesn’t cover you, you’re able to deduct the amount of your contribution from your current income. If you are covered, there are limitations placed on exactly how much you can deduct from your income.
The amount of deductibility is based on your income—as it reaches certain levels. And the deductibility of your IRAs may ultimately cease altogether as your income continues to increase. It’s also important to note that IRS Contribution Limits have been showing an increase from one year to the next.
In the event you’re age 50 and older (as is the case with yours truly), you can contribute an additional $1,000 called a “Catch-up” contribution.
Also, since the IRS is pretty diligent, if you contribute more than the allowable amount, they will nail you with a penalty of 6% on the amount you went over on your contribution.
Finally, you may want to consider both these investing strategies for women, especially if (like all of us) you’re getting closer to retirement age each day. Knowing a few of the basics will help you start planning your life goals sooner rather than later.
3. Emergency Fund & Savings
OK, you caught me; an emergency fund isn’t technically investing. But you can start investing in your peace of mind by contributing to your emergency fund—and you should!
The reason it’s crucial to put aside an emergency fund is that according to Pew Charitable Trusts, the average-sized “crisis” is $2,000 (and that was a few years ago, so it’s likely increased) and most families aren’t prepared. One trip to the emergency room, car breakdown, or home repair might derail your financial outlook for a long time.
Using savings strategies will help you leverage your money now and in the long-term. And, if you’re feeling like the general population, and simply don’t know how to start building your savings through low-risk laddering strategies, use the following guidelines.
There are three savings accounts you should consider:
- Cash Cushion: the amount you need to keep in your checking account to cover fees and unexpected overdraws.
- Emergency Fund-: $1000-$2000 is typically a good safety need to keep on-hand in case of an emergency.
- Savings Account: Ideally, your savings should cover 3-6 months of your living expenses (but this may differ based on your situation).
By utilizing a combination of allocating your funds, as well as implementing proper timelines of when they come due, it will provide you with the needed cushion for any unexpected events.
Now, if you think setting this up is a great idea, but you’re crazy busy (and who isn’t?!), you must read The Busy Woman’s Guide To Growing Your Money. As with anything in life, you must first know your “WHY” to prioritize its importance to you. By getting control of your money, you’ll experience what true freedom really means.
4. Real Estate
Once you’ve established your 401(K), IRA, and emergency savings, you’re well on your way to a place where you can start to really implement investment strategies to grow your money fast.
Real estate is an excellent option. Owning your own home, rental property, or even commercial property is a solid financial investment because it protects you from inflation and provides you additional stability.
Consider the purchase of your home with two questions. First, is it a home you will live in for a time-certain? Second, do you have an idea of what the long-term projected value may be, based on previous comparable homes in the area?
You may want to look for a property that’s either been updated or is in a newer up-and-coming area. This will help enhance the long-term value as the area develops around you.
5. Optional: College Fund & Securing Your Children’s Future
Parents often worry about the financial well-being of their children. You may hear people say saving for retirement is more important than saving up a college fund. After all, your children can borrow for college, but you can’t borrow for retirement.
For those of us with children (or even grandchildren), we still may want to ensure they receive a quality education. In fact, this is a big priority for many people. If something happens to you, you need to know they are secure and stable in life.
So, while a college fund isn’t a necessary investment for every woman, it may be important for you. Of course, you never know—you may get lucky and your children receive scholarships and grants, but this isn’t a solid plan, and it’s best to prepare a college fund.
In the worst-case scenario, you put money aside in a college fund, only for the children to earn award money, or maybe decide not to attend college altogether. In this case, you can invest the money for your (or their) future. It still doesn’t hurt to invest the funds smartly.
According to CNBC, parents save an average of $18,000 for their children’s college. If you end up not needing the money for their college tuition, direct it towards your retirement.
On a final note, another option instead of saving into a college fund is to consider purchasing a life insurance policy to help fund college in the event of your premature death. (Then again, when isn’t death premature?!) Remember, life insurance isn’t there to benefit you; it’s meant to provide for those you leave behind.
Time to Dip in More Than a Toe in Your Financial Future
Now that you have an overview of these smart investing strategies for women, it’s time to dive in. You already have more control over your financial future than you thought you did. So why not take control and develop it into having the financial security you want for yourself?
By utilizing these investing strategies, you will build your investment portfolio and, in turn, fulfill your lifelong goals.
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Once you get your budget rolling, check out my post on 6 Simple Steps to Get Financially Organized. This post also includes a helpful checklist available in my Resource Library (free to access).
Admittedly, this particular checklist has a larger-scale focus on your overall financial picture, but I genuinely feel that getting your finances organized is essential.
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