How women can use their friendships to invest better

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There is nothing I treasure more than the bond I have with some of my closest girlfriends. Whether it’s hour-long phone calls, a weekend getaway, an after-work dinner, or a fun text message thread, we all thrive on friendships. special ladies that we have shared over the years.

But it wasn’t until recently that I realized that the skills we use to maintain those relationships can actually translate well into how we manage our money.

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Speaking with Shari Greco Reiches, Behavioral Finance Expert and Wealth Manager at Rappaport Reiches Capital Management, I learned that the work we put into maintaining friendships – like discussing our values ​​and staying together through tough times – is in fact techniques that can be applied to money management and make us good investors.

“You already do it every day,” says Reiches. “And you can use those same skills when you invest.”

Here are the seven skills women use to form and maintain friendships that can also make them great investors, according to Reiches.

1. We love to talk about our values ​​with each other

Your closest friends understand your values ​​and what is most important to you, and they help you stay true to that.

“Women are values ​​driven, which sets an excellent roadmap for determining how to spend their money, ”says Reiches.

Understanding your values ​​and how you want to spend your money can help you target your investment goals, which in turn helps you build a plan.

You’re also less likely to jump on the next stock tip, but instead think about how your investments reflect what you want to accomplish in life.

2. We build friendships through planning

Whether it’s planning a luncheon or a girls’ night out, women maintain their friendships by planning times when they can see each other. The same approach applies to investing: take the time to manage your finances, and it will pay off in the long run.

This means setting aside time to sit down and identify your investment goals, outline your investment strategy (where you want to put your money to grow), and coordinate a conversation with a financial advisor to make sure you’re on the right track.

“Women are naturally good at multitasking, organizing and planning,” says Reiches. “Be the personal financial director of your investments.”

3. We benefit from a diverse group of friends

Chances are your friend group consists of a mix of people from all walks of life, from childhood and college, work and extracurricular activities, friends that you have met through the family and spouses and friends of friends. The list is lengthened increasingly.

“We benefit from this variety of friends,” says Reiches. Just as we are better for the diversity of our friends, so are our investment portfolios. You’ve probably heard it before, but diversification is the key to maintaining a low-risk portfolio that will benefit you in the long run.

4. We tell ourselves how it is

Your closest girlfriends will help you stay honest and true to yourself, and good investors try to do the same.

Instead of getting carried away by the news cycle and the daily distractions of Wall Street, good investors stay the course. This means eliminating all the chatter and letting our initial investment strategy unfold. And when in doubt, we bring in an expert to give us a pep talk or help us revise our plans.

5. We like good deals

Of course, it’s a stereotype that women like to shop. But the truth is, most women manage their household finances and are often the ones who watch prices more carefully than their male counterparts. It is a good habit to apply to investing as well.

“Successful investors focus on costs,” Reiches says, and they don’t just look at returns. They also find a low cost fund or ways to save on taxes.

When looking to invest, consider investing in an index through a brokerage account. Index funds are affordable and offer less risk than buying individual stocks.

Some of the best index funds are those that follow the S&P 500. Charles Schwab’s S&P 500 Index Fund (SWPPX) is a simple option with no minimum investment. Its expense ratio is 0.02%, which means that every $ 10,000 invested costs $ 2 per year. Passive or index funds typically have an expense ratio of 0.2%, which is therefore particularly low. The Fidelity ZERO Large Cap Index (FNILX) tracks large cap stocks, which, according to the website, “are considered the stocks of the 500 largest US companies,” and it has no expense ratio.

The best robotics advisors also offer low-cost diversification. Betterment, for example, has no minimum balance requirements and the annual account fee is 0.25% of your fund balance. Improving investors can take advantage of tax-saving strategies such as tax-loss harvesting (the robo-advisor will automatically sell the losing holdings to help offset taxes) and an “insight” tool. tax impact “which shows users how much they might have to pay. pay taxes before withdrawing funds.

6. We stand united in difficult times

“Life is not always easy,” says Reiches. When times get tough, you know you can count on your girlfriends for support.

Just like you will weather any storm with a friend, good investors don’t throw in the towel when the market crashes. “The greatest harm [to your portfolio] doesn’t stick to the plan and doesn’t come out when things go wrong, ”says Reiches.

7. We rely on each other to manage our emotions

A friend is always on the phone, and investors can turn to the pros when they are unsure of their next move. Investing can get emotional, and having a financial advisor to lean on can be crucial during these times.

Good investors look for advisors who can help them stay on track throughout their investment journey and offer support when it’s time to make changes to their portfolios or overall goals.

To access an advisor, there are a few robo-advisers who offer the advantage at very affordable prices. Ellevest members can get a discount on 1: 1 sessions with Ellevest Financial Planners and Career Coaches starting at just $ 38 (20% discount for Essential members, 30% for Plus members, 50% for Executive members; learn more about the different membership levels of Ellevest).

Ellevest stands out as a solid option for women because its platform algorithm takes into account the important realities of women’s lives, such as pay gaps, career breaks and longer life expectancies. , so that women can get a real idea of ​​their financial situation.

For those with a lot of money to invest, consider Betterment. Its premium plan requires a minimum balance of $ 100,000, but users have unlimited access to a financial advisor. However, you don’t need to be a premium user to get Advisor access. One-off advisor consultations for non-premium users cost between $ 199 and $ 299.

As you explore different ways to improve your financial independence, remember to tap into these effective habits and skills that you have already incorporated into your daily life. It turns out that being a good friend and a good investor can go hand in hand.

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Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.



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