Demystifying Investing

A few weeks ago, I attended a networking event for women entrepreneurs here in NY. To be honest, I’m not a huge fan of these types of events. I usually end up in the corner with a bottle of wine, talking to the person I came with. But this one was different. The guest speaker was Sallie Krawcheck, a Wall Street escapee and founder of Ellevest — an investment platform for women. Krawcheck’s mission is to close what she refers to as the “Investment Gap”, which keeps women financially behind their male counterparts.

I’m a novice, at best, when it comes to investing so I was interested in what she had to say. After a brief talk, during which Krawcheck had us hanging on her every word, hands immediate shot up for the question and answer portion. Turned out I wasn’t the only novice investor in the audience.

One of the first questions for Krawcheck was, “How should we allocate our monthly budget when it comes to spending and saving?” Krawcheck’s suggestion was a simple breakdown of 50% for needs, 30% for wants and 20% for investing.

“20% for investing,” I thought. My cheeks flushed with the embarrassing realization that I wasn’t putting anywhere near 20% towards my investments. I barely even had investments! But I was instantly comforted by the murmured gasps and chatter that rippled through the crowd as we seemed to come to a collective realization that we were all falling behind on the investing front.

Then Krawcheck put it in a way that really drove her point home: “If you’re making $85K a year and putting 20% of your income into a savings account, you are on track to lose $1.1 million dollars over the next 40 years. In the shorter term, if you wait ten years to invest, you could be losing about $100 every day. Let me repeat that, $100 per day!”

“If you wait ten years to invest, you could be losing about $100 every day.”– Sallie Krawcheck

That $100 was on my mind for the rest of the day, and weeks to come. I went home that afternoon intent on building an investment plan that would ensure I didn’t keep losing that $100 for the next ten years. But here’s the thing, I work in branding and digital. I don’t know a thing about investing and I didn’t know where to start.

Ok let me honest, I didn’t know where to start is really just code for I was scared to start because I might fuck up and lose all my money (totally rational, right?). My Type A, mildly OCD tendencies mean that I like to have all the facts and all my ducks in a row before I’m ready to tackle a new endeavor. As Krawcheck notes, this is not unusual for women when it comes to investing. Women tend to be much more cautious, whereas men are more likely to jump right in and figure it out as they go.

For a moment I thought, “Well, why don’t I just jump in and figure it out as I go. Why don’t I invest like a man?” But that didn’t really sit right with my feminist self. The investment sector is tailored for men. It’s a notoriously masculine space that’s dominated by jargon, complexity and aggression, so what benefit was there for me to play into these tendencies?

“We will never solve the feminization of power until we solve the masculinity of wealth.” – Gloria Steinem

Instead, I decided to put my hyper-organized and cautious attributes to good use. If you’re in the same place as me, here are a few tips to consider before tackling your investment strategy:

  • Learn More about the “Investment Gap”: We’re all familiar with the Pay Gap, but did you know there’s also an Investment Gap? Download Ellevest’s Guide to Investing called “Mind the Gap” to learn more about the Investment Gap and what you can do to overcome it.
  • Build a Budget: I built my first budget in high school (thanks, mom!) but unfortunately this wasn’t a habit I stuck with as I got older. After listening to Krawchuk’s talk I came straight home and downloaded Mint. I spent a couple of hours customizing the categories so they made sense for my spending habits. I kept Krawchuck’s 50/30/20 rule in mind and was able to set-up a budget that came close. For now, I’m only allocating 10% towards my savings because I live in NY and that extra 10% is the difference between living alone and living with a roommate, so I consider that money well spent.
  • Put Yourself on a Money Diet: When I first started tracking my new budget, I had a hard time picturing where exactly all my money was going. As an exercise, I put myself on a money diet. For one week, I only spent money on absolute essentials: groceries, utilities, MTA, etc. It’s not necessarily easy to say no to happy hour with friends, but it was interesting to compare the week of my money diet to the weeks that followed. As a single woman living in NY, I knew a lot of my money was going into the ‘Restaurants & Bars’ category in Mint but I wasn’t fully aware of just how much until this exercise. I wouldn’t say it drastically changed my habits but it did make me more conscious, which has led me to make some different spending decisions.
  • Pay Down your Credit Card: This an absolute must. Keep your money for yourself, stop giving it to the credit card companies with their exorbitant interest rates. If you’re able to right now, pay it off altogether. If not, move on to the next step.
  • Transfer your Credit Card Balance: If you are carrying a balance on your credit card, transfer it immediately to a credit card company that will charge you 0% interest. There are a number of companies offering 0% and low interest credit cards in 2017, some will even reward you with major interest savings on a big purchase or balance transfer. Now here’s the key, transfer your balance and then don’t use that credit card! The interest you’re saving on your new card should go directly to paying off your debt, don’t treat it like free money.
  • Refinance Your Debt: Pay down or refinance any other debt with an interest rate in the double digits. If you have student loans, set-up auto-pay. This can often save you up to 0.25% in interest expenses. If that doesn’t work, call your lender and ask if your interest rate can be reduced. It doesn’t always work but sometimes it does and well, ask for what you want! If you have good credit, see about getting your loans refinanced. Start-ups like Earnest and CommonBond offer tech-friendly ways to lower your interest rates.

For the next few months I’m going to be documenting my investment journey here on Demystified. I’m by no means an expert, and I don’t think I’ll ever be, but I’m going to stop being afraid of investing and I’m going to figure out how to start earning back my $100/day! I hope you’ll follow along with me. Please feel free to add any tips or questions in the comments below. I’d love to hear what works for you when it comes to investing!

Photo by Vitaly

Samantha is the Director of Strategy for Briteweb. She serves on the Board of Advisors for Feminist.com and is a volunteer with the Activist Council for Planned Parenthood NYC.

Leave a Reply