By Lydia Andrews - Senior Advisor at Holborn Assets & Founder of LoveYourself Financially
So many women are giving away their power when it comes to their personal finances.
It’s not because their spouse is managing their money.
It’s not because they’re staying in a role that undervalues and underpays them.
It’s not because they are living above their means.
While these are all important issues that require addressing individually, I want to focus on the one that I have seen women feel comfortable with; keeping their money saved in a bank account.
Yes, that’s right. Women are giving away their power by doing something as ‘normal’ as saving money.
Saving money is great for short-term plans, such as saving towards a vacation or a car purchase, but when thinking about your money beyond five years, leaving it in the bank is doing more harm than good.
This harm is caused by inflation, a termite that eats away at idle money. Over the past few years, the inflation rate in UAE has been about 3%, which means you’re losing money every year your money is earning less than 3%.
Having your money earn the inflation rate is the barest minimum, and I want so much more for you! I want you to live in abundance, building wealth so that you can have more than enough to fully enjoy life. So you can take your power back.
I want you to have the autonomy and authority to live your best life and make decisions for yourself based on abundance, not lack. Having wealth means you have the power to control your life, present and future.
Building wealth means investing, by letting your money work for you. The stock market is a great place to start investing because you don’t need a lot of money to get started. Learn from the rich - they’re getting wealthy through the stock market, so you should too.
How do you get started? It’s much simpler than you think - let’s break to down into 4 steps.
Step 1: Your Investment Platform
The first step is to choose your investment platform. There are many out there, so do a quick search then look into on investor protection, the number of funds available and reviews. You can choose to invest on your own or to work with a wealth advisor or broker - each option gives you access to different types of funds. Either way, you need to be aware of what the fees are: service fees, transaction fees, withdrawal fees. If you’re working with an advisor or broker, they should clearly explain how they get paid, whether commission or as a percentage of your portfolio.
Step 2: Your funds
Now that you’ve selected your investment platform, you need to select the funds. For a beginner, funds are safer to invest in, compared to individual stocks.
Rather than investing all or most of your money in one company (or bond), why not invest in several? Funds automatically diversify your portfolio - through one fund, you could be investing in hundreds of companies.
Check the fund factsheet (which provides a brief on the fund) and check for these while researching and selecting funds:
● Ensure the fund’s objective aligns with your financial goals and your risk profile. For example, if you are a cautious investor, you want to select cautious funds.
● Check the fees: funds have their own set of fees, which reduce your return. Check on other similar funds to compare fees to make sure you’re getting the best option.
● Performance: you want to see the trends on how the fund has performed in the past to know the type of return you can hope for. This isn’t guaranteed, but it’s a helpful indicator.
A few websites to help with your research:
Step 3: Set it and forget it (kind of)
Sitting back and watching your money grow is the fun part. While you should check on you investments regularly, you don’t need to freak out when there are ups and downs.
You’ve invested in a well-diversified selection of funds. When investing longterm, it’s best to hold onto them and let the magic of compounding do its thing. Compounding simply refers to when your money makes money, which is reinvested to continue making money. The longer the investment period, the greater the the compounding. You can work harder for more money, or you can work smarter by letting your money work for you.
Today, you can choose which route to take (I’m hoping it’s the latter).
Step 4: When should you start?
Perhaps your parents didn’t know to teach you about investing. Perhaps you didn’t know how or when to start investing. We can’t go back in time. But now that you know what to do, it’s time to take your power back by building wealth. Building wealth gives you freedom, flexibility and power to live life on your own terms, to impact others and to change the world, one decision at a time.
You can start now. Start with what you have and build your wealth from there.
Bonus: The Most Important Step
The most important step: letting go of your apprehensions and feeling confident to start investing. Working on your wealth mindset is about overcoming the mental blocks that you’ve internalized to live by.
Guess what? Research shows that women, while often hesitant to invest, outperform men when they do! You’re destined to succeed.