Why Investing is a Must for Female Entrepreneurs | Savvy Wealth
why investing is a must for female entrepreneurs

Why Investing Is A Must For Female Entrepreneurs

In the realm of entrepreneurship, women have become adept at tackling the challenges and uncertainties that accompany business growth. Amidst this dynamic landscape, investing has become a must for female entrepreneurs, an essential tool empowering them to navigate these challenges with confidence and build a secure financial future.

The significance of investing has grown even more imperative as we simply cannot save our way to retirement and especially not early retirement. Savings over the long rate barely keep up with inflation and as such our real spending power decreases.

The traditional notions of retirement are shifting and financial independence is desired, it’s becoming increasingly clear that relying solely on savings is not a viable strategy, especially if the goal is early retirement.

A staggering 36% of women over the age of 36 express a wish that they had commenced their retirement savings journey earlier. Moreover, an even more compelling statistic emerges – 7 out of 10 women express a longing to have started investing their surplus funds sooner. These numbers paint a striking picture of a collective realisation among women that a paradigm shift is necessary in the way they approach their finances.

More than half of women, 57% to be precise, are now motivated by the idea of investing as a pathway to financial independence. This reflects a profound shift in mindset – a realisation that their financial destiny is within their control and that strategic investment can be a catalyst for achieving their dreams, whether it’s travelling the world, early retirement, pursuing passions, or all of the above.

The sobering reality of post-retirement sustenance is starkly visible in Australia, where the age pension is anchored to homeownership. With a median annual rental cost exceeding the age pension for a single person, and amidst a persistent housing shortage, the need for a solid financial cushion is undeniable. The numbers tell a story of a changing landscape where entrepreneurship, bolstered by wise investment choices, becomes not just a choice, but a necessity.

In the subsequent sections of this blog post, we will delve deeper into the reasons why investing is an essential tool in the arsenal of female entrepreneurs. We will explore some common roadblocks to investing and how they can be overcome, address common concerns, and chart a course towards financial empowerment. So, let’s embark on this journey to uncover the compelling reasons why investing is not just a luxury but a must for female entrepreneurs in today’s dynamic world.

In the 2022 Money Moves Survey conducted by Fidelity, women identified the following roadblocks holding them back from investing more money.

Let’s address these obstacles one by one with facts, whilst remembering our relationship with money plays an important role in our financial reality and overcoming our limiting beliefs around money is imperative. 

The perception that thousands of dollars are required to invest

Gone are the days where investing required $10,000 to open an account and even with that, true diversification was challenging to obtain. The advent of micro investing platforms and robo advice have changed the game and starting your investment journey with $5 has become a tangible reality. However, while it’s never been more accessible, it’s still important to do your research on the diverse platforms and investment options available.

Perceived riskiness of investing

There is a difference between trading and investing. Trading is a proactive and dynamic practice that centres on capitalising on short-term market fluctuations. Traders engage in frequent buying and selling of assets such as stocks, commodities, or currencies, with the aim of profiting from price movements over relatively brief periods, which can range from seconds to weeks. Trading is inherently risky.

Investing on the other hand, emphasises a longer-term perspective and is aimed at building wealth over time. Dollar cost averaging can be an effective way to minimise the risk of choosing the right time to enter the market.

When it comes to investing, your time horizon really matters, the shorter it is (years as opposed to decades) the more likely you are to experience negative returns or losses. The longer the time horizon the higher the probability of positive returns.

The S&P500 has never had negative returns over a 20 year period dating back to 1926. So, what about the rest of the world? If you invested in the global share market excluding the US (the MSCI World ex-US index) it’s also never had a negative return over a 20 year period or 15 year period, although this data is from 1970-2023 (still a 50 year period).

The only 15 year negative return for the S&P500 was in 1944, the end of the great depression and World War 2.

Of course historical returns aren’t an indicator of future returns, but it paints a decent picture.

It’s our emotions that derail us, not the investment markets. Human beings have recency bias so if the market is performing poorly, the tendency is to think it’ll continue to perform poorly. It’s the trading (buying and selling) of shares that results in the negative return. Likewise, when markets are performing well, human beings believe they will continue to rise. Whilst history shows this has happened over time, there are many bumps in the road.

So understanding your relationship with money and building emotional resiliency alongside your financial and investing education is imperative.

Cash plays an important role but it won't enable you to build wealth

Whilst savings accounts are receiving higher interest rates currently than they have in a long time, if you look at long term returns cash barely keeps pace with inflation. Cash plays an important role in your overall portfolio for liquidity and having access to emergency funds, but it’s not going to enable you build wealth and create sufficient passive income to achieve financial freedom.

The data speaks for itself – the barriers are not insurmountable, and the benefits far outweigh the perceived risks. The journey to financial freedom and independence is within reach, and investing is the vehicle that can take you there.

The sobering reality of the age pension’s inadequacy in meeting basic living costs and the potential pitfalls of relying solely on savings paint a clear picture. Simply put, the path to a comfortable and ideally early retirement, demands a proactive and consistent approach. It necessitates embracing the transformative power of investing.

Remember, investing doesn’t need not be an all-or-nothing approach, start small where you’re at and build confidence over time.

As a female entrepreneur, your innate courage, innovation, and resourcefulness have already positioned you on a unique trajectory. Now, imagine harnessing those very qualities to navigate the intricacies of the financial world.

Embrace investing as an essential instrument in your arsenal, propelling you towards not just financial security, but true independence. As you continue to build your entrepreneurial empire, let your investments be the pillars that support your aspirations, dreams, and the legacy you envision.

The journey may have begun with statistics, but it culminates in a future that you, as a trailblazing female entrepreneur, have the power to shape – one investment at a time.

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This is general information and for educational purposes only.