By Erin Sardich, Market Director at J.P. Morgan Wealth Management
More women are taking charge of their finances and investing in their future. J.P. Morgan Wealth Management’s latest Diverse Investor Study found that the majority of women investors surveyed are confident about their investment knowledge and take a cautious approach with their investing strategy.
While these findings are encouraging, there are still many women out there who aren’t investing and may be wondering how to get started. If you’re looking to take those first steps to becoming an investor, here are a few tips to keep in mind.
The power of compound interest
We hear a lot about creating a budget and saving our money. But investing is another bucket to think about for those long-term goals. Thanks to the power of compound interest, investing can be a powerful tool to help build wealth in the long run. What is compounding and how does it work? When you invest your money, those funds accumulate interest on top of any interest that you’ve already earned. As a result, the new amount can potentially grow at a faster rate. Your investments won’t always go up.
But the sooner you get started investing, the longer your money has to potentially compound over the years.
Checklist for getting started
Build a cash emergency fund. You don’t want to be in a situation where you’re forced to sell your investments in the event of an emergency. Before you dip your toes into investing, consider saving enough cash to cover unexpected life events. While it’s typically suggested to save three to six months’ worth of expenses, the specific amount will depend on the individual and should take into account your personal situation and comfort level.
Define your goals. Everyone’s financial situation is unique. Take a moment to think about what you’re investing towards. What do you hope to achieve in the next year, five years, ten years and beyond?
Maybe you’re looking to buy a home in the next few years. If you have kids, you might have future college costs to think about. You probably want to retire comfortably one day. It’s important to outline all of these various goals, so you can create an investing strategy that is personalized to your life and priorities. Everyone’s path will look different.
Make a plan. Once you’ve outlined your goals, it’s time to map out a plan for how you’d like to get there. You can think of it as a roadmap for working towards your different goals. Our research found that having a plan can pay off. Respondents who have a plan for their goals are significantly more likely to say their financial situation has improved in recent years and rate their financial health positively.
When it comes to planning, women have unique financial considerations to keep in mind. For example, in the U.S., women tend to live longer than men on average. Many women act as caretakers to children or older parents, and some take career breaks during their lifetime. It’s important to take these factors into account when building your long-term plan.
Support in your journey
Education is key when it comes to investing. The good news is that there are so many free resources out there to help investors stay informed and make smart decisions with their money. You can find a library of free educational content at chase.com/theknow, with articles ranging from investing basics to market insights from our strategists.
It’s okay if you don’t have all of the answers. You don’t need to approach it alone. Some people find it helpful to work with a professional. A financial advisor can partner with you in each step of the process, from outlining your goals, to creating a personalized plan, adjusting your plan as your life changes and helping you stay accountable throughout the journey. If you prefer to work with a professional, it’s important to choose someone who you feel comfortable discussing your finances with and really trust.
Money is personal, and it’s important to work with a financial advisor who makes you feel empowered to play an active role in the partnership.
Erin Sardich is a Market Director at J.P. Morgan Wealth Management based in Ohio. Erin oversees financial advisors in Cleveland and Akron who help clients plan and work towards their goals.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.
