Perspectives on Investing

The more you know about investing, the more confident you’ll be about making decisions.

None of the factors that define you—your age, marital status, education, or occupation—limits what you can learn about investing or the uses to which you can put your investment knowledge.

What’s more, the difference between women who make the most of investment opportunities and those who don’t isn’t necessarily the amount they invest. Most of the time, it’s how carefully they plan, how soon they start investing, the investment choices they make, and how consistently they stick with it.

The knowledge you need to be an effective investor will come from a combination of the money management skills you already have, the information you can get in print and online, the experience of friends and colleagues, and the help of a financial advisor. The bottom line is that there are four basic things you need to know:

• what your financial goals are
• which investments are available
• how they work
• why specific ones may help you meet your goals

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PUTING KNOWLEDGE TO WORK

Learning investing, like learning anything else, works best when you put your knowledge to work right from the start. It might help to compare learning about investing to learning how to handle a job or play a sport. You certainly weren’t born with those skills, and chances are you had some help on your way to mastering them. But you did it. The same is true of learning about investing.

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FOR FIRST TIME INVESTORS:

Identify a goal and the type of investment that may help you reach it—perhaps mutual funds or stocks.
Narrow your choice to a specific investment by talking to your financial advisor.
Invest promptly, reinvest any earnings, and add new money regularly.
Track how well your investment performs by checking its return online, perhaps monthly or quarterly, and comparing that return to its benchmark index.
After a year, evaluate how well your investment has performed in comparison with similar investments, with how well you expected it to do, and with what you had been earning on your money before you invested.
If the investment is meeting your expectations, keep building it systematically and add another one. If not, consider a different investment.

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THE VALUE OF ADVICE

You can approach investing in a number of ways. If you have clearly defined goals and the time and knowledge to do your own research, you may prefer to make your decisions independently. But if you’re new to investing or know it’s time to move what you’ve accomplished to the next level, you’re likely to find the help of an investment professional invaluable.

An advisor can help you clarify your financial goals and estimate how much money you’ll need to meet them. He or she can explain types of investments that may be appropriate for helping to turn those goals into realities and describe the risks and potential rewards of the choices you will need to make.

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THE MORE YOU KNOW…

Research conducted by a number of firms has confirmed that in the past women have tended to invest too conservatively and therefore less profitably than they might have. But women who are more confident about their investment knowledge regularly commit more of their income to investing and are more self-assured in making investment choices.

Some of that increased activity is the product of greater commitment in the financial community to meeting women’s needs. Some of it results from the experiences of women in the workforce, and some from a widespread concern that employer support for people who are retiring is being scaled back.

Part of your responsibility as an investor is to keep learning. New ways to invest emerge all the time, some of which may be appropriate for you. Tax laws change, which may mean rethinking what investments to make for your tax-deferred accounts. There’s little question that staying on top of what’s happening can be a major advantage as you make far-reaching financial decisions.

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A WORKING LIFE

If you’re doing a job you love, or you’re ready to start a new career, you may plan to work past customary retirement age. This age, which is 66 if you were born from 1943 to 1954, gradually increases in monthly increments from 66 to 67 if you were born from 1955 to 1960, and is 67 if you were born in 1960 or after. Social Security rules say you won’t lose any part of your benefit for earning money after you reach full retirement age.