There are 3 types of women investors. Who are you?

“The biggest risk of all is not taking one,” --  Mellody Hobson, American businesswoman and board chairwoman of Starbucks Corp. (1969 -     )
 
BY JULIA ANDERSON
Type No. 1: Women who are confident investors, who understand investing basics like reinvesting stock dividends, interest rates and fund management fees. They appreciate investing for the long-term, managing their own money by saving and spending wisely, and they know what they are doing even when markets slide, and interest rates go up. These women have a significant and growing nest egg into their 70s.
 
Type No. 2: A second group of women (the majority) know they must save and invest for the future but don’t have the confidence to do it on their own. They turn to a financial adviser for help and meet with her or him once or twice a year to see how their accounts are doing. Or they may attend a once-a-year meeting hosted by their employer where they listen to updates from an outside rep from the company managing their 401(k). This group may be too cautious with their nest egg.
 
Type No. 3: There’s a third group that can’t be bothered with saving, either from fear or hopelessness. Investing is too complicated, they say. Besides they don’t think they earn enough for it to matter. They believe that they can’t afford to save and besides their employer does not offer a retirement savings plan.
 
Their mantra? “I am just going to keep working until I die.” They use credit cards for short-term purchases and save money to pay for short-term things like the next family vacation or a grandchild’s birthday. In their minds they are doing the best they can. These women don’t have a nest egg.
 
There are steps each of these groups can take to save and better invest money for the long-term, for their retirement. Maybe, they won’t have to bag groceries in their 70s.
 
Smart Women Smart Money TIPS for each type: 
 
Let’s begin with Group No. 3: Those who are not saving and expect to work until they drop.
 
Tips:  Lower your household expenses! Do that by sharing housing costs with someone, renting out a back room or getting rid of your car with its related expenses. Look for all the ways to reduce your ongoing expenses. Once you’ve lowered those expenses put the newly found money (however small that amount is) inside a tax-deferred saving account – an IRA or Roth IRA. You can do this on-line for free. Get someone to help you.
 
Some states offer programs that painlessly siphon money from your paycheck to such a state-sponsored account. If your employer has a 401(k) program save enough out of your paycheck to get the employer “matching” money.
 
Talk with your family about your financial future. If you have grown children, tell them where you are financially and where you want to go. They can help.
 
Increase your income. Look for a new job that pays more. If you need better qualifications sign-up for job-training opportunities that will give you a pay increase. Ask for a raise, ask for training on the job. Learn new skills. Put yourself first. Look for ALL opportunities to grow your income while cutting your expenses.  
 
When you start your own tax-deferred account invest in an inexpensive stock index mutual fund. Then make regular contributions. Reinvest the dividends. Over time you will be surprised how the miracle of compound interest (dividends) will grow the value of the account. If interest rates move higher, put money into a (safer) certificate of deposit through your bank or credit union.
 
If you have a spouse/partner talk with them about what your financial life will be like when they die. Marrying is better than living together because Social Security will provide widow’s benefits, if you have been married for 10 years or more. This happens even if you’re divorced. Set up an online account at the Social Security Administration website www.ssa.gov. Call them, check out what your benefit will be depending on your age when retire. The longer you wait the greater the benefit up to age 70.
 
Group No. 2 Tips:  If you need retirement saving, planning and investment advice, get help. Just make sure you know how much that help will cost. I still don’t know what the management fees were on my 401(k) account at work. If I could do it over, I would demand fee information.
When you are choosing an adviser, your first question should be, “How do you make your money, what are your fees on this account?” Anything more than an annual 0.75 percent is TOO HIGH.
 
When markets are going up it is easy to discount management fees because they are better disguised. But fees can reduce the long-term growth of a retirement account by thousands of dollars. Secondly, don’t let them “churn” your account by moving you in and out of investments. They may be making extra money on those transactions. (See my separate chapter on How to Hire a Financial Adviser).
 
Don’t let your adviser put you into an investment product that you don’t understand…annuities fall into this category for me. So does private long-term health insurance coverage and life insurance. If a return on your investment sounds too good to be true, it is.
 
Even though you are using someone else to manage your money, take time to track stock markets, interest rates and economic trends. You must be able to ask good questions and know where the economy is going. Read up on investing. How can that hurt?
 
Group No. 1 Tips: Confident investors enjoy staying up on day-to-day financial news. They enjoy checking on their investments and most of all they know that staying the course is essential to long-term rewards. Sometimes even for the most seasoned investor that’s hard to do. That is why having trusted friends might help. When the urge to SELL overwhelms you, talk to someone before pushing the button.
 
Avoid becoming tangled in the financial affairs of children and grandchildren. Being co-dependent is not good for anyone. Easy to say, hard to do when you love them.
 
If you are on your own be sure you have a will and have designated someone with power of attorney to manage your affairs if you can’t. Consider using a bank trust department to manage your money while you are still living and to settle your estate when you die. Your heirs will thank you. 

No matter what type of investor you are, there are ways to take charge of your money. Who cares more about it than you do?  - Julia