Money Expert Nicole Lapin's Wealth Secret for Millennial Women
- Nicole Lapin, money expert, businesswoman, and the host of Money Rehab podcast, provides advice aimed at millennial investors, especially women.
- She advises avoiding get-rich-quick schemes, and suggests using a proven investment strategy.
Listening to the advice of financial expert Nicole Lapin could help women make the best investing choices.
Building wealth can be a challenge for everyone, but investing is often key. Unfortunately, many people -- and especially millennial and Gen Z women -- face barriers that can make it more difficult to embark on their journeys toward financial independence.
The good news is that with the right advice, you can make wise investments that increase your net worth. In honor of Women's History Month, Nicole Lapin has provided some tips to readers of The Ascent. Lapin is the host of Money Rehab, and she's also an author, businesswoman, and television news anchor.
Here's Lapin's advice for millennial and Gen Z women
Lapin recognizes the unique obstacles that women face in investing. Lapin maintains that "the biggest barrier comes from the fact that we don't learn about it in school, and most of us don't learn it at home."
Unfortunately, it's not just inadequate knowledge that stands in women's way. "Studies have shown that little boys associate powerful words with money, while little girls associate scarcity words," Lapin says. "So couple the fact that we aren't taught it with the idea that our socialization around it stems from fear or shame, and it's no wonder we are looking at such low percentages of women partaking in investing."
The gender pay gap, unfortunately, also plays a role, with women earning just 80.4% of what men earn as of the first quarter of 2020. This is a gap that, even as the labor market tightens, has proven stubborn to overcome and is likely to persist, with far more men than women planning to ask for a raise in the near future.
The good news is that Lapin has a wealth-building secret many women can take advantage of despite these barriers -- even those who are stressed about financial management, intimidated by the investing process, or who haven't been taught how to put their money to work.
"Stick to dollar-cost averaging while you index funds and chill," Lapin says. This advice is a rock-solid approach to building wealth that has worked for investors for generations. (We'll explain how to do it below.) Her advice mirrors a tip given by one of the world's best investors, Warren Buffett, and it can be especially valuable for anyone who's intimidated by putting their money into the market.
"At the end of the day, money and investing is a language like any other," Lapin says. "If you go to a foreign country and you don't speak the language, you'll be really confused. If you go to Wall Street and you don't speak the language of money, you'll be really confused. Until, of course, you learn it. Then you can join the conversation, and you'll wonder why your former self thought it was so hard in the first place."
Follow her simple wealth-building secret, and learning the language becomes easier, as does building a diversified portfolio.
How to put Lapin's advice into practice
Lapin's wealth-building advice can be successfully followed by just about everyone. But for those without introductory investing knowledge, her suggestion to dollar-cost average into index funds may sound difficult. The good news is that dollar-cost averaging and index funds are both simple to understand.
Dollar-cost averaging means regularly investing a set amount of money in a particular investment. So, for example, if you want to invest $5,000 per year, you could invest around $417 per month, rather than investing all $5,000 at one time. By buying a set amount of an asset at regular intervals, you eliminate the challenge of trying to perfectly time your investment.
Chances are good you'll sometimes buy high and sometimes buy low. And that's okay. "Don't try to time the market," Lapin advises.
Since no one can predict when an asset's price will hit rock bottom or reach its peak, dollar-cost averaging eliminates the guesswork that can lead to failure if you invest your entire nest egg at an inopportune moment.
Index funds are funds designed to mimic the performance of a specific financial index. When you buy one, your money is spread around, and you get a small stake in all of the assets that make up the benchmark index. For example, if you buy into an S&P 500 index fund, you buy a piece of each of the 500 or so large U.S. companies that make up the Standard & Poor financial index, widely viewed as a barometer of the stock market as a whole.
Index funds are low-fee investments because you don't pay a professional to actively select investments. And they are low-risk investments because of the instant diversification they provide. It takes very little research to pick a good one, and outsized losses are unlikely. They can be one of the safest investments, providing consistent returns over time and eliminating your risk of falling victim to a scam, or one of the get-rich-quick ideas Lapin advises steering clear of.
If you use Lapin's advice to dollar-cost average and buy into an index fund such as an S&P 500 fund, you are likely to be well on your way to growing your net worth as your money works for you.
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