Investing is for anyone who wants to have control over their financial future — including you, your best friend and your mom.
But with the rise of socially responsible investing, there's a new motivating factor for women: Your investments can also help support others. These initiatives, which focus on creating an impact with your investment dollars, have opened the door for you to not only put your best financial foot forward, but also to help others do the same in the process.
Here are four ways to invest not just for yourself, but in the success and advancement of other women.
1. Start by investing in yourself
When it comes to investing, the most important message for women is to start.
Many women doubt their own investing ability. In a 2017 survey from Fidelity Investments, only 9% of women thought they would outperform men investing. In reality, female investors often earn higher investment returns than their male counterparts. This is in part because women investors tend to trade less frequently (a restraint that can lead to higher returns) and take on less risk. But according to a 2019 survey conducted by information services company S&P Global, only 26% of American women are invested in the financial markets.
Not investing has significant long-term financial consequences for women. Due to more gaps in work history and longer lifespans, women may need to save more for retirement than men, despite typically earning less over their lifetimes. This issue is compounded for women of color, for whom the wage gap is even wider. While these realities may feel discouraging, any amount invested is better than nothing, and getting an early start on your own retirement fund will put you in a better position to help others.
2. Use a provider that makes it easy to invest in women
Once you make the decision to invest in your future, there are two ways to go about it: Getting help or doing it yourself. If you want help, robo-advisors let you invest without having to deal with your investments directly. These online services build and maintain an investment portfolio for you, often for much less than the cost of working with a financial advisor.
Ellevest not only offers an impact portfolio option to invest in companies that advance women in leadership, but also considers women’s longer lifespans and lower average wages when building their portfolios. Stash, while not technically a robo-advisor, can help you find investments along mission-driven lines. For example, the “Women Who Lead” fund focuses on companies with women in leadership positions.
3. Find funds that benefit women
If you prefer the DIY investing approach, you can find mutual funds that focus on benefiting women or other marginalized groups and add them to your portfolio.
While every fund is different, some consider whether companies offer sexual harassment training, whether a company does business with minority and women-owned firms or has fund managers who partner with organizations working to stop human trafficking. Many socially responsible investing funds are graded using ESG investing factors (ESG stands for environmental, social and corporate governance). High scores in the social and governance categories may indicate a company with a diverse leadership board or equal employment opportunities. The number of ESG funds has increased significantly over the last five years, giving ethical investors more options.
4. Work with a female financial advisor
If you have a more complex financial life or want help coming up with a financial plan, it may be time to find a financial advisor.
According to data from the U.S. Bureau of Labor Statistics, in 2019 just over 32% of financial advisors were women. Aside from the research above that points toward women as stronger investors than men, there are serious benefits to working with a female financial advisor. If you identify as female, it can be beneficial to have an advisor who shares your worldview and may have a better understanding of the challenges you face. Using a female advisor also puts money into that advisor’s pocket, allowing them to continue working in a male-dominated field.
The XY Planning Network, a network of certified financial planners, has a keyword filter where you can add “women” to find a female financial advisor. Ellevest also offers advisory sessions with their team of female financial advisors and coaches that nonmembers can purchase on an as-needed basis.