9 Investing Tips For Women Who Want To Create Financial Freedom
Investing is a powerful tool that can open doors to endless possibilities and help you create the life you’ve always dreamed of. In this post, we’ll go through 9 investing tips for creating financial freedom, exploring the exciting world of investing and uncovering the path to financial empowerment.
Imagine a few years from now, you wake up able to create your own schedule and prioritise you. You pinch yourself because you have more choice and freedom in your life than you ever could have imagined. All because you made a decision today to prioritise managing money and investing effectively.
You have a life with more spaciousness, more time for fun and play, more time to do things you love and make an impact.
It starts with moving from feeling overwhelmed about money and investing to feeling confident and empowered! Confident and empowered in your own ability to manage and invest your money. This is what’s going to give you a sense of peace, stability and financial security so you can be fully present and do all of the things that bring you joy, happiness and fulfilment.
So, let’s dive in and discover the 9 investing tips for women who want to create financial freedom.
Get crystal clear on your vision for your life
It starts with creating a vision for your life, what you value and desire and truly want to do. Get crystal clear on this, paint the picture. How do you want to spend your time? What do you want to achieve? Maybe it’s financial security, the ability to travel, to have quality time with your kids or family or the freedom to pursue your dreams without constraints.
Calculate how much income you need and the value of your investable assets required
To bring your vision to life, it’s crucial to determine your financial freedom figure. This figure represents the amount of investable assets required to generate sufficient income to support your desired lifestyle. Calculate your monthly expenses for a basic lifestyle, your current lifestyle and your dream lifestyle, then factor in inflation. This will give you three different desired income levels, which will require different levels of investable assets.
Approximates are okay to start with, this will become clearer with time. Your vision and absolute dream life is the amount you use for your so freaking incredible financial freedom figure.
- Your base level financial freedom figure, this covers your basic expenses (rent/accomodation, groceries, insurances, transport, a basic amount of entertainment.
- Your mid level financial freedom figure includes everything in your base level plus a little bit more. Eating out, more activities.
- Then, there’s your so freaking incredible lifestyle where you get to travel a lot, support loved ones, donate to charities you care about and generally live an amazing life.
It’s now time to calculate the value of investable assets required to provide those levels of income. Let’s say your base level lifestyle is $30,000 per year and you have a 3% income return, you would need to have $1 million in assets invested.
If that return was 5%, the investable assets required become $600,000.
Want $60,000 per year and you’re getting a 5% yield (your income return). You’ll need $1.2 million in assets! The beauty of this is you are not drawing down on your capital and your investments are continuing to grow.
This article shows you how to calculate the amount of investable assets required at different return levels.
Gain clarity on your cashflow and seal the leaks
Let’s dive into the numbers, shall we? I understand that there might be some resistance, but embracing this process will lead you to true financial freedom. Start by examining the inflow of money (your income) and the outflow of money (your expenses). This simple exercise will bring about a remarkable level of awareness regarding your financial situation. Take a moment to assess whether your money aligns with your values and identify any potential leaks. Are you paying for things you no longer value or need? Is your earning and spending in alignment with your values? My comprehensive money management guide will assist you in tracking these crucial aspects.
Mindful and intentional allocation of funds to savings, debt reduction and investing
Now that you have a clear understanding of where your money is flowing, it’s time to take mindful action when it comes to allocating your funds. Intentionally direct your finances towards savings, debt reduction, and/or investing as well as having funds allocated for things you value and enjoy. If health and wellness is important to you, allocate funds for a gym or wellness membership.
Begin by setting aside a portion of your income to build up your savings. This will create a safety net for unexpected expenses and open doors to future opportunities. Simultaneously, prioritise debt reduction by allocating funds towards paying down outstanding debts, freeing yourself from financial burdens and increasing your overall net worth. This has the added benefit that once it’s paid off, you’re able to redirect those funds to growing your wealth and creating passive income.
Lastly, consider allocating a portion of your funds towards investing, allowing your money to work for you and generate long-term wealth. By being intentional with your financial decisions, you can create your dream life.
Elevate your income to be able to supercharge your investments
It’s easy to live below your means when you’ve elevated your income assuming you’ve resisted lifestyle creep where your lifestyle expenses increase with your income.
Even more importantly though, focus on ways you can expand your income. Take a moment to assess whether you are being compensated in line with the market rate for your role. Are you able to do some freelance work or start an online business? If your car remains unused for a significant portion of the week, you might consider renting it out through platforms like Turo, Uber Carshare, or GoGet.
Alternatively, investing a few hours each week in completing surveys can provide an additional income stream. What education could you invest in that would enhance your earning capacity. There’s only so far you can cut expenses, expanding your income may seem more challenging initially, but it’s going to have a far greater impact in the long run.
Understand risk and return
All investing comes with risk, some assets have more risk than others. Knowing your appetite for risk and if you can withstand fluctuations in the value of your capital is imperative. Your asset allocation influences the amount of risk you take, that is the fluctuations in the share price as well as your potential returns.
Growth assets tend to have more volatile returns over the shorter term, the higher the volatility the higher the risk but also the potential for higher returns over the longer term. Volatility means the value of the asset fluctuates and increases and decreases depending on market events.
Defensive assets are considered lower risk and are less volatile, they don’t move up and down as much but generally don’t have the same potential for higher returns over the longer term.
Diversification is known as not having all of your eggs in one basket and can help to smooth out your returns over time. Your risk profile determines what percentage you have allocated to growth and defensive assets and then how much allocated to the individual asset classes within the growth and defensive assets. You can read more about diversification and asset classes here.
How do you feel about the potential for your investment to decrease by 20%, 40% or even more in the short term? Would you want to withdraw your money? These types of questions are what is going to help you ascertain your risk profile. There are also risk profile tools online, like this Vanguard one.
Explore different investment vehicles
Begin, if you haven’t already, the process of diversifying your investment portfolio by exploring different avenues that pave the way to financial freedom. Real estate investing can generate a steady income stream. Delve into the share market by considering individual shares, managed funds or exchange-traded funds, enabling you to partake in the growth of various companies. Furthermore, contemplate the possibility of starting your own business or investing in ventures that align with your passions and expertise.
Harness dollar cost averaging
If you choose to invest in the share market, consider dollar-cost averaging (DCA) into shares. This means investing a fixed amount of money into the stock market via shares or exchange traded funds on a regular basis, regardless of whether the market is up or down. By investing consistently over time, you can take advantage of market fluctuations and reduce the impact of short-term volatility. This disciplined approach allows you to accumulate wealth steadily and benefit from the potential growth of your investments.
Embrace consistency
Consistency is your friend on your financial journey, the value of your contributions, the consistency of your contributions and the amount of time you are invested is a far greater determinant of reaching financial freedom and creating passive income than trying to time the market. Start small and cultivate confidence and self trust in yourself and your ability to manage and invest money more effectively.
The idea is to live your life in a way that makes you feel lit up. Alive. Full fledged. Beautiful. Know and find what nourishes you inside out, bones to skin, and then build your world from that alone. All else is not part of your revolution. Or your ultimate evolution.
One day you’ll thank yourself for educating yourself about money and learning how to invest because it completely changed your life. Let that moment be today. By implementing these 9 investing tips of clarifying your vision, determining your financial freedom figure, getting clear on your cashflow, being mindful and intentional with money, expanding your income, understanding risk and returns, exploring different investment vehicles, adopting dollar-cost averaging and being consistent, you are well on your way to financial independence.
Embrace your financial journey with unwavering confidence and determination, recognising that you possess the ability to shape the life you truly desire. Begin investing like a powerhouse today and witness your wealth flourish, enabling you to create the choices and freedom you genuinely deserve.
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This is general information and for educational purposes only.
