How to Invest Like a Woman

September 16, 2019


Algorithms! Online Trading! Brokers! Stock Trading Apps! Let's be honest; the stock market is a massively male-dominant industry, but that's changing. "Women are a growing economic force, expected to add $6 trillion in earned income globally over the next five years" according to the Boston Consulting Group.

From experience, I've worked on an investment trading floor where the environment was 80% male, and the remaining were females sharing ideas on which investments are right for particular portfolios. It can be difficult for women to get their ideas heard and to be taken seriously.


However, technology is breaking down such barriers every day and has recently paved the way for women to give their perspective on investing.

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Having a masculine industry such as that in the wealth management universe can be intimidating for some looking to learn more about investing and putting their money to work.



In such an industry as that in the wealth management universe, it can be intimidating for some looking to learn more about investing and putting their money to work.


Most are not familiar with the terms or financial jargon like asset allocation, bond duration, ROI, to name a few. It can be quite overwhelming. Also, women tend to invest differently than men and may have different styles.


In, Dr. Utpal Dholakia writes the difference in financial decision making between the two sexes. "Women, by and large, tend to be less optimistic than men, which fuels their cautious decision making" while men tend to be less risk-averse and take riskier bets.


Experiences like this may lead to confusion in the home when getting couples on the same page to achieve particular financial and retirement goals, but don't let that be disheartening to you.  It uncovers a critical niche or market to be discovered.  

For example, this void in female investing and female financial planning is what sparked an idea for Sallie Krawcheck, who launched Ellevest.   She is the CEO and Co-Founder of this financial technology (fintech) start-up company, and her talents are helping women achieve their personal financial goals.

Her experience is quite impressive.  She worked at Merrill Lynch Wealth Management and Smith Barney before becoming the Chief Financial Officer at Citi.  Before this, she received her higher education from Colombia Business School.




So Why Consider Ellevest?
Ellevest applies an investment algorithm designed to focus on diversification and investment selection. Most of the portfolios invest in Exchange-Traded Funds, also known as ETFs. As an avid investor, I love ETFs because these investments have proven to charge some of the industry's lowest fees and expenses, plus this type of investments are well diversified.


Remember the title, Men are from Mars and Women are from Venus?  Even investment styles are very different.  While men tend to be more risky with their money, women are not and are much more risk-aware.  They tend not to like volatility in the market.  

Men like to compare their stocks' performance to benchmarks while women strive to achieve their own financial goals.

This isn't to say one strategy is better than the other.  What I like about Ellevest is the comfort and professional advice it provides to women.  Because the company focuses on this niche, they will help more women invest and reach their investment goals.  

Ellevest has 21 different asset classes designed to give you a well-diversified portfolio.  From US Large Cap Growth to International Developed Bonds and US Real Estate, they manage each class to cover the majority of sectors and countries.  

If you have an Individual Retirement Account (IRA), they can tailor a plan for you by shifting assets into a tax-deferred account.  


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What About the Fees?
Do you think you need to have at least $250,000 ready to invest?  I've worked for some firms that require this much money before they'll give you the time of day.  

Fortunately, Ellevest Digital requires no minimum.  Therefore, if you want to invest $1,000 today, your fee amounts to $2.50/year.  That's because of this online investment firm charging a low annual fee of 0.25%.  If you have $100,000 to invest, your annual fee would be $250.  

There may be other fees required and calculated one you start investing.  For instance, their portfolios charge anywhere from 0.06% to 0.20% per year.  

The company offers a Premium plan which increases the annual fee to 0.50% and does require a minimum balance of $50,000.  This gives you personal access to their staffed Certified Financial Planner (CFP) professionals, as well as, access to Ellevest Executive Coaches.  


They Use Morningstar!
Almost every investor uses or has used Morningstar at some point in investment history.   One unique tool Ellevest utilizes fully is incorporating the growth of a woman's salary into her investment plan.  By utilizing Morningstar, you'll visually see an education-based salary curve with data and assumptions, such as inflation, to reflect how your personalized plan will grow over time.


A Woman's Style

Lisa Smith of writes, "Study after study has shown that women are less aggressive than men when it comes to investing." One theory is because of the female workforce earning less than men. Another suggests "biology and the maternal instinct play a role, arguing that the protective instinct often credited to mothers makes them more reluctant to take risks." 





Whether you're single or married, many investment firms are taking notice. Companies such as Charles Schwab for example, are creating pages just for women. In their Insights and Ideas page, their content is labeled "Women & Investing". With appealing marketing videos, it reflects the struggle of women trying to invest and helping to break these barriers.


Also, they've dedicated a platform to help divorced women, age 50 or older, who may be facing lower savings and significant expenses. Schwab's Financial Consultants can help plan through these financial challenges.


Check out an article in the Charles Schwab's Women & Investing: 3 Traits that make Women Better Investors.

Final Thoughts
As a fan of technology and entrepreneurs creating new niches to fill voids in the business marketplace, the team at Ellevest is shaking things up. If you are interested or know somebody, who may benefit from their service to to learn more and to connect with the team.


Everyone needs to be setting aside their money for the future. Focusing on a financial objective can be tough when one doesn't know how to get from A to B or if your partner has different goals than you. By discussing your financial goals with a professional, he or she can take a look at your current situation and provide a roadmap to help you achieve your goals.









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