Investing in the stock market has traditionally been dominated by men, meaning women are often at a disadvantage. In fact, only around 54% of women self-identify as having a high level of investing knowledge, compared to 71% of men, according to a recent survey by The Motley Fool. Similarly, only 34% of women feel comfortable making investment decisions, compared to 49% of men.
As a result, women are less likely to invest at all, making it more difficult to build wealth and retire comfortably. But Sallie Krawcheck, CEO of woman-focused investment platform Ellevest, has some simple advice for women looking to invest more: Just dive in.
It's never a bad time to get started
It can be nerve-racking to get started investing, especially now when the market is volatile. And if you're not 100% confident in your investing abilities, it's even more tempting to put it off.
"There's a pressure for perfection with women," Krawcheck said in an interview with CNBC. "Women will not invest if they don't understand, [but] men will invest anyway."
She continued, "My advice to women investors is, find a place...where you trust them, and just get in the water."
Time is your most valuable resource when it comes to generating wealth in the stock market, and for every month or year you wait, it will become exponentially more difficult to catch up. So even if you feel nervous about investing or can't afford to invest much now, it can still be smart to simply jump in.
For example, say you have a goal of saving $500,000 for retirement. Assuming you're earning a modest 8% average annual return, here's approximately how much you'd need to invest each month, depending on how many years you have to save:
| Number of Years | Amount Invested per Month | Total Savings |
|---|---|---|
| 20 | $925 | $508,000 |
| 25 | $575 | $504,000 |
| 30 | $375 | $510,000 |
| 35 | $250 | $517,000 |
| 40 | $165 | $513,000 |
Data source: Calculations by author via Investor.gov.
Putting off investing for even five years may result in having to save hundreds of dollars more per month to reach your goal. So if you're on the fence about it, sometimes it's still best to get started now.
How to keep your money safer
Of course, diving into investing doesn't mean blindly throwing your money into the market. After all, if you invest in the wrong places, you can lose far more than you gain. But even if you're not an experienced investor, there are ways to keep your money safe.
If you have access to a 401(k) or IRA, that's perhaps the simplest place to start -- especially if you have a 401(k) with matching contributions from your employer. Those contributions are essentially free money, so it's wise to invest at least enough to earn the full match.
If you're eager to invest outside a retirement account but aren't sure where to start, an S&P 500 ETF -- such as the Vanguard S&P 500 ETF (VOO 0.17%) -- can be a fantastic option.
S&P 500 ETFs track the S&P 500 index itself, so they include the same stocks as the index and aim to mirror its long-term performance.
This type of investment will still experience short-term volatility, but over many years, it's extremely likely to see positive average returns. So if you're feeling nervous about where to invest, an S&P 500 ETF is far more likely to keep your money safer.
It can be more challenging for women to break into the field of investing, but you'll thank yourself for getting started sooner rather than later. You don't have to be an expert to make a lot of money in the stock market, but when time is on your side, you can earn more than you might think.
