- Do not be intimidated by your money and how to invest it. This is not rocket science.
- As the example of Bernie Madoff shows, you cannot delegate investing to someone else. There are lots of stockbrokers who want to pat your hand and say, “Everything’s taken care of” and have you just leave it to them. Don’t.
- If you will devote an hour or even 30 minutes a day to doing some reading about investments, you can learn enough to follow your own advice about what to buy. There’s so much free information available. Read. Just read.
- Figure out some simple guiding principles. Good ones include:
- Do nothing in haste
- Focus on not losing money more than on making it
- Be aware of your time horizon. If you’re going to need the money in five years, don’t invest in anything where the market’s price in five years could wipe you out.
- While diversification doesn’t always work, putting all your eggs in one basket is not a good idea. Putting all your 401K money into your employer’s stock is a big, huge, horrible mistake.
- Suze Orman gives very good, practical advice. Reading a book by her would be a wonderful place to start. She explains it in plain English, and women should absolutely feel empowered to do this stuff themselves. Plus, it gives you this feeling of security to not feel at the mercy of other people.
- There’s no silver bullet. I can’t say, “Do this and your troubles are solved.” There’s no certain thing.
- Prepare for inflation. Most of us remember the 1970s, when it was not a good time to be invested in things like 30-year bonds. Given what the Treasury Department is doing with its printing press right now, people should really think hard about the chances of high inflation coming back. So if a broker tells you to have a portfolio made up of all these municipal bonds with 10- to 20-year durations, just type into Google “municipal bonds + inflation.” You’ll find that’s not a good combination!
- Don’t overcomplicate.
- Find out how the person selling you any kind of financial product gets paid. Let me give you one horrible example. Most stock brokerage firms right now charge what are called “wrap fees,” which means they charge 1% of the assets in your brokerage account. All over this country, people have pulled their money out and put it in money market funds that are sitting in these brokerage accounts earning .5%. They’re earning a half a percent of interest, and they’re paying 1% to their brokerage firm, meaning that they’re getting a negative return of a half a percent.
It ought to be illegal for a brokerage firm to take 1% of your money for you to have it sitting in a money market fund that’s earning less than you’re paying them. They’re not doing anything to earn you any money. It’s outrageous. So understand how people are getting paid, and what they’re getting paid to do. It’s the most important thing.
People say, “Oh, the fee is 2%.” You know what? It’s not 2%. If you’re earning 5%, the fee is 40%!
The amounts of money that can be made quickly, by means that are not very honest, attract a certain kind of person. And, while I know many honest people on Wall Street, it has, compared to the general population, a higher percentage of people who have an opportunistic way of thinking about other human beings. And women usually are not treated very well by that type of person.
With all of that said, I will tell you that many financial advisors — and I know a lot of them — want to do a good job for their clients and are pressured by their employers into selling products that earn the highest fees, and into giving advice that is not, really, the best thing for the clients. Many of them agonize over this, because their livelihood depends on keeping their job and doing these things. I’ve received heart-rending emails. I received an email from someone who said he cut trees down part-time to make a living rather than do some of the things that his stock brokerage firm would have him do. So it’s the system that’s the problem, not just the people.
So, again: Find out how the person selling you any kind of financial product gets paid. Just be ruthless about that.
- Make people stop talking fast. If you will sit down and take a piece of paper and write down numbers, all these things will reveal themselves. But you have to slow…it…down.
Thank you for outstanding advice.
thank you for being here and reading it. it is awesome to be talking to such a group of inspiring women.
Great advice, I am so uninformed about these things. I listen to all the experts but somehow it does not sink in.
I do not have much money to invest anyway but I do have a retirement account and usually let the bank take care of it. I do want to be more active in the decisions.
Good thoughts! Women are often more risk-averse when it comes to investing, which can be a good thing. We also tend to ask a lot of questions, and rely on WOM (word of mouth) for referrals. I’d suggest using a fee-only CFP (Certified Financial Planner) or a CPA. You can find fee based professionals through the National Association of Personal Financial Advisors (locate one by proximity to your address) at http://www.napfa.org, or contact the American Institute of Certified Public Accountants at 888-777-7077. Just as we go to a health professional if we aren’t savvy in the medical field, we should be able to rely on a trusted professional for financial help. Ask around – friends, neighbors, colleagues – for recommendations, but again, focus on fee-only professionals who have met certain standards (such as CFPs and CPAs).
Jan Cullinane, co-author, The New Retirement: The Ultimate Guide to the Rest of Your Life (Rodale)
My parents were not investors until their very late years and then they took a very conservative approach. It has served them well. Mom’s gone now and Dad is able to live off their investments and a small pension. While I have a rudimentary understanding of investments, it all seems so surreal. I made a huge investment mistake when I was younger that cost me dearly so I have been reluctant to go back into the fray. Now, in my 50s, I’m finally taking small steps and investing in a 403b (I work for a nonprofit) where they match a small percentage of my investment. I know I need to do more. Your advice is very helpful. Thanks so much.
Those tips are GREAT.
My husband and I haven’t been wise in planning how we invest our money. We just learned about a way to help us track our spending so we can have some money to invest later on. We discontinued all of our credit cards except one. And we will use it to track our monthly expenses. Then we will pay if off that one bill at the end of the month. We will try this and see if we can see where our spending is going–perhaps we will see where we will have money left over to invest.
great set of advice for people of any age
When I was a teenager, and working for my father, I had made about $1,000 and was keeping it in my room. My father got wind of my saving habit, and suggested that I go get a bank account. He was always working and couldn’t go with me. He told me to introduce myself to the bank manager (whom he knew, of course) because I was giving them my money, and I should feel free to talk with them about it since I was letting them keep it for me.
I was very nervous that day, at 14-years-old or so, but I did what he said. The manager greeted me and treated me like an adult. Ever since then, I have always asked to meet the manager of the bank that I do business with. It has helped me, especially when I was overseas working as a volunteer (with not so much money) and making international transfers.
You don’t have to have a lot of money to be safe with what you do have.
My best tip is to pay yourself 10% FIRST!! And then don’t touch that money until you have enough to invest. You CAN live on what’s left and you will slowly be building reserve! The mental feeling of knowing it is there create very good vibes!
Many thanks for the great tips, Alice! It’s my belief that woman can benefit from more assistance in these five lifeskill areas, each of which builds upon the one preceding it:
1) Self-esteem - belief in oneself – the bedrock of personal and professional success
2) Assertive communication – the ability to speak up and speak out for one’s own needs and desires
3) Negotiation strategies – In the spirit of cooperation and compromise, we often sacrifice our ability to negotiate strategically.
4) Risk-taking skills – I agree with jancullinane that women tend to be more risk-adverse ((see her comment on this post). While this can be a good thing, it can also cost us the push we need to take calculated risks that will pay off in greater long-term returns.
Money management – Without self-esteem, assertive communication skills and negotiation know-how, we’re too often operating in the dark when it comes to managing our money and put ourselves at the mercy of those who would manage our money for us.
I find all your comments and suggestions to be awesome. I read Suze Ormond in the mid 90′s after we fought a 13 year medical legal battle and lost. We were left stunned and without any fall back funds. I trusted my gut and began reading everything I could.
We are not yet in the multi-millionaire category but I sleep well at night and know all is well. This is more good advice i can put to use to keep tings on this positive path..
Thank you
It posted twice..sorry
Great article. very inspirational.
Thank you for this. I have been wanting to begin investing the little bit of money I have but must admit to being wary of the stock market after seeing what happened to my husband’s 401k. It is a relief to know I am not alone in feeling the way I do.
It is amazing and inspiring to me that you invested so much of your time into really getting to know what I can only imagine is a complex man (why else did you need an entire room for your files?) His accomplishments are well known, and his techniques may be learned, but to know the person, and how he became that person, is actually more interesting to me. Bravo on this accomplishment!
Thank you so much for understanding that there are all kinds of investments! I have learned it pays off to invest in yourself by always learning as much as you can. spending so much time with Warren Buffett was an extraordinary opportunity. I wish everyone could have done the same — writing The Snowball was my way of giving as much of that knowledge to the world as I could.
Thank you! Good advice, all of it. I had to learn the hard way how to handle my money. Most of my life I was such a spendthrift, I ended up going bankrupt in 1995. Since then I’ve changed my ways. I tell my nieces, do not buy anything if you don’t already have the money for it. Credit cards should be for emergencies only and paid off at the end of the month. Savings can be done automatically by opening up an account that has automatic withdrawal. Good luck to everyone who is trying to change their financial education! Knowledge is power.
I think the ten investment tips above cover everything I can think of and the only things that I might add are to always live on less than you make and pay yourself first. The tip on reading was the most valuable to me. Thanks for the article.
All of your stories above are very inspiring to me. Pay yourself first is a point well worth making. You have the power to take care of yourself; use it!
Get a money mentor – someone who is at least several steps ahead of you in mastering money and investmenst.
My parents told me to pay myself first and then your bills and what was left was for me. If it wasn’t enough, I learned how to make payments and worked to get better paying jobs.
Wish I’d heard this a long time ago.
I agree with the statement "It ought to be illegal for a brokerage firm to take 1% of your money for you to have it sitting in a money market fund that’s earning less than you’re paying them." But how about the IRS charging you tax on savings account interest, when the amount you get is less than inflation ?
I concur with paying for financial advice. I lost thousands trusting a Certified Planner with a Big corporation. Not only paid a yearly fee, but discovered all the funds she invested in paid her commissions; never touched a no-laod, and when I quit, I got charged all kinds of fees, $150 to close each account, $75 to write a check! to transfer the $ to another fund, ec. Fees never specifically disclosed upfront.
My Money Rules:
1) Invest in yourself…improve your education to get a better job; learn interviewing skills, etc. Learn about stocks, bonds etc
2) Have a budget,,,alter when needed, but dont spend money you dont have. I write down everything I spend in a dialy calendar; it gives you a heads up on what youre really spending
3) Learn to WANT less; we live in a culture that encourages having more and buying more
4) Save some to share. True abundance occurs when you have enough left over to share with those in need
I’m confused. In one place this list is attributed to Warren Buffet himself. In another place, it suggests that this is “her” list of strategies.
I need to get a book by Suze Orman. I don’t understand investing at all and leave it to others. You are so right! I need to
be more in charge of my investments and not leave it to others. thank – you
great advice- we should know. We lost considerable money thru a “reliable stock brocker” and a friend, whose boss ended up committing suicide. This is using the services of a well known company. We were never able to recover that money at all.
I think younger generations should learn from all this debacle and schools should start teaching students about money early on, so they can avoid costly mistakes later on.
Thank you.