Investing for Gen Z Women: Top Considerations for Success

While studies have proven that Gen Z women are already leading the way with investing, 40% of Gen Z women would feel more motivated to start investing, or invest more, if they had clear steps or a guide to get started, according to Fidelity’s 2023 Investment Study. It’s crucial for us to bridge this gap and empower you to start investing early so you can get a head start on building your wealth and legacy. So, here’s everything you need to know about investing:

Why's Investing Important?

Investing is a key tool to help both men and women get in the driver’s seat of their financial futures. Investing helps you build wealth so you can achieve long-term goals, like buying your first home and beginning to save for retirement. However, women especially face unique challenges regarding their wealth compared to men. Here are a few reasons why investing is a powerful tool for women to utilize and add to their financial plans:

Your Investment Questions: Answered

When should I start investing?

The sooner you start investing, the better. That’s why we’re hoping to encourage you to start investing today to build wealth for tomorrow, especially since 40% of women today feel like they should be doing more with their finances.

Where should I start investing?

To set yourself up for success, you’ll first want to develop a financial plan with a financial advisor. Here you’ll lay out both your short- and long-term goals and priorities, which will help map out where you should invest, as well as your risk tolerance. Your financial plan will include details like a realistic budget, emergency funds to cover unrealistic expenses, a debt repayment plan, retirement savings, investment approaches, insurance coverage and potentially an estate plan.

Once your plan is finalized, you can use it as a reference point when making investing, saving and purchasing decisions. Regularly review and update your plan with your financial advisor to ensure it remains aligned with your evolving goals and priorities.

How much should I invest?

There’s no right or wrong number on how much you should invest. We recommend starting somewhere, no matter how small. Choosing how much you invest depends on your financial situation and plan, which we encourage you to discuss with your financial advisor.

Should I work with a financial advisor?

We recommend seeking professional advice with an experienced financial advisor who can offer personalized support. Advisors can help answer questions, set realistic financial goals and develop a financial plan tailored to your circumstances and goals. They can also provide tips to help you navigate complex financial decisions and offer ongoing support as life changes occur.

What investment terms should you know?

To better understand investing, there are a few terms you should be familiar with. Here’s a quick rundown on what each one means:

• Portfolio: An investment portfolio is a collection of financial assets, like stocks, bonds, mutual funds, exchange-traded funds and other investment vehicles. Portfolios can be held by an individual or an entity.
• Risk: Risk refers to the potential for an investment to experience loss or deviation from its expected return.
• Diversification: Diversification equates to the spreading of investments across different types of investments and industries to reduce risk. Diversifying your portfolio is crucial, especially for new investors, as it reduces risk and volatility and can even lead to a higher return on your investment.
• Performance: Performance refers to the measurement of how well an investment or portfolio has performed over a specific period of time.
• Stocks: Stocks, also known as equities, give you the opportunity to buy ownership in a specific company or companies. Stocks have consistently earned a great return over the long term. They do have higher risks, so they may not be suited well for someone with a low risk tolerance.
• Bonds: When a company, city or government needs to borrow money, it will sell bonds. Bonds, also referred to as fixed income securities, diversify your portfolio and can balance out a downturn in the stock market. They offer more stability than stocks and can provide a steady stream of income.
• Mutual funds: Mutual funds are typically managed by portfolio managers and include a portfolio of stocks, bonds or other securities. They offer greater liquidity than other investments and are easy to sell and trade.
• Exchange-traded funds (ETF): An ETF is a basket of securities that you can buy or sell through a brokerage firm on a stock exchange. They’re appealing to individual investors who want to buy and sell any time of the day, and they generally have lower fees.
• 401(k): 401(k)s are an employer retirement savings program that offers tax advantages and may include employer matching contributions, which can significantly boost your savings.
• IRA: A traditional IRA is an individual retirement account that offers potential tax deductions on contributions.
• Roth IRA: A Roth IRA is an individual retirement account that allows for tax-free withdrawals in retirement. Learn more about the difference between Traditional IRAs and Roth IRAs.
• Alternative investments: These investments are classified as outside the traditional investing vehicles, like stocks and bonds. A few examples of alternative investments, which fall into different categories, are real estate, private equity and commodities.
• Sustainable investing: Sustainable investing is an investment approach that keeps in mind responsible environmental, social and governance factors in addition to financial returns on your investments.

What should I do with my workplace retirement plan?

Did you know that 35% of women are worried they’re not saving enough for retirement? Growing your retirement savings is an impactful yet straightforward investment vehicle that we recommend beginning with. Which retirement plan you should choose depends on your long-term retirement goals and your current employment status. If you’re employed, you should sign up for your employer’s retirement plan, usually a 401(k) or IRA, especially if they match your contributions. If you’re self-employed or own a small business, consider a self-employed 401(k).

Remember, no matter which retirement plan fits your needs, the sooner you start saving, the better. Regular contributions and taking advantage of employer matching contributions can help your wealth accumulate over time. Consult with a financial advisor to determine the best retirement savings type best aligns for your long-term goals.

What about buying a house?

Homeownership may not seem like a feasible option just quite yet, but if buying a home is a long-term goal of yours, develop a plan to make it happen. There are many benefits to buying a home that you’re planning on selling in the future. Owning property provides you with the opportunity to sell for a profit if the market is in a good place. Selling a home could also help build equity or potentially generate rental income if you go that route. This tangible, low-risk investment vehicle provides stability and some control of your money and how it’s used.

Want to get a head start on investing? Let’s start a conversation. If you’re looking for one-on-one guidance, reach out to your current advisor to learn more. If you don’t have a financial advisor, get matched with one to begin investing today.