Breaking Barriers: Women and the Path to Investment Confidence

Published on August 15, 2024 | LPL Financial

New research from Fidelity Investments gives a unique insight into how many women approach investing and other financial decisions.¹ For example, more than half of all women, compared with just 43 percent of all men, say they would prefer to sit tight and wait out market volatility instead of selling. Women are also less likely than men to decrease their total contributions during volatile markets.

However, there are some areas in which many women would like to change their investing habits. A total of 57 percent of women say they don’t feel prepared to handle dips in the market, compared to less than 40 percent of men. Overcoming these fears and challenges can be crucial to take charge of your financial future. Below are actionable tips to help address your investment concerns.

Educate Yourself

Knowledge is power. The more you learn, the better prepared you’ll be to make an informed decision when needed.

Take time to educate yourself about investing basics, including different asset classes, risk management strategies, and long-term financial planning. There are nearly endless resources available, including books, online courses, message boards and forums, and financial literacy workshops in your community.

Start Small

If you’re nervous about investing, start with small amounts of money that you can afford to lose. Consider opening a brokerage account or investing in low-risk options like index funds or exchange-traded funds (ETFs) to get started. As you become more comfortable investing, you can gradually increase your contributions and spread them among multiple accounts.

Set Clear Goals

Define your financial goals and objectives, whether it’s saving for retirement, buying a home, or funding your children’s education. Having specific goals in mind can help you stay focused and motivated to invest for the long term.

Diversify Your Portfolio

Diversification—investing in different types and classes of assets—is key to managing investment risk. As the saying goes, don’t put all your eggs into one basket. Spread your investments across different asset classes, industries, and geographic regions to reduce how market fluctuations impact your portfolio.

Investing in diverse assets can help smooth out volatility. It should also improve your chances of achieving consistent returns over time instead of “boom and bust” cycles.

Seek Professional Guidance

Consider working with a financial professional who understands your unique financial situation and goals. This person can help you develop an investment strategy that works for you and be an invaluable source of guidance and advice.

Stay Disciplined

When done correctly, investing isn’t very exciting. It requires patience, discipline, and long-term thinking. Avoid making impulsive decisions based on short-term market fluctuations or emotional reactions. Always resist the temptation to constantly buy and sell investments in response to market volatility. If you’re uncomfortable with your exposure to loss, the answer is to revisit your target asset allocation, not panic sell.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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Footnotes

¹ “Women Tapping into Financial Superpowers,” Fidelity Investments, https://preview.thenewsmarket.com/Previews/FINP/DocumentAssets/651505.pdf