Why Women Should Invest in the Stock Market

by: Michelle Kennedy Hogan

Why Is It Important That Women Invest in the Stock Market?

When I first began researching on how to invest my extra cash a few years ago, I was dismayed at the lack of information available for beginners, and there was even less directed at women. First let's start off by saying that I began as a complete "newbie". Little cash, no knowledge beyond that + was good and - was bad, and no support. I started by calling a broker I saw advertised on TV. Big mistake. They told me that when I had about $10,000 I should come back and talk to them. $10,000? If I had $10,000 I would have done almost anything except call a broker! So, I went to the internet. Back in those days (we're talking 1995, here) the Internet was not the mass media production it is now, no online brokerages, no daytraders, no real-time quotes. Just market news for those who were initiated, and mortgage rates for those of us who weren't. Where were the "10 steps to financial independence"? All I found were the "10 steps to reducing my cellulite." Helpful, but it wasn't going to make me any money. Gradually, I learned the lingo and discovered how confusing it all can be. And then I began to demystify it for myself. What I found out was that investing isn't hard and it doesn't require a huge amount of cash to start. I found out that I don't even need a broker. There are many questions to be answered when it comes to investing. The first one I will answer here. Why invest in the stock market anyway?

Well, let's face it, shall we? No one ever promised a rose garden...or maybe they promised but...the statistics say that most women will not get married as soon or stay married as long as we expect to. Further, we have a nasty habit of living 7 to 10 years longer than men, and like it or not, 9 out of 10 of us will be on our own financially at some point in our lives. We are also more likely to spend more time out of the workplace raising children, relocating with a spouse, continue our education or starting our own businesses. This is all great. It's encouraged, yet it is highly underpaid, very hard work.

Did you know that 75% of the elderly people living in this country below the poverty level are women? Another nifty statistic is the fact that the average woman will spend 14.7 years away from the "workforce", compared to her male counterparts 1.6 years. Don't overlook that lost income. These are missed opportunities to contribute to 401K programs and other investment options.

Money is a touchy subject, though, isn't it. Couples fight about it, in laws quiz you over it. The American public has a misconception about money. Money equals power. Money equals image. Most respondents to a Worth magazine survey said that the feature they would most likely change about themselves is the amount of money they have. The quest for money transcends age, race and gender.

It seems odd, then, if money is so completely on our minds that very few Americans, particularly women, actually feel confident handling their money. Money and certainly investing seem to have obtained some mystical quality that only "they" can supersede. Did you know that only 5% of the country has 5 or more investments? And that 51% hold all their money in checking or savings accounts?

Let me throw a couple of interesting numbers at you. If, according to The Motley Fool, you put $10,000 into an index fund right now, in ten years it will be worth about $19,700. If you take that same $10,000 and invest it wisely in the stock market, using a long-term approach, history has shown that your investment will swell to $51,600, and that's assuming you don't add anything to it between now and then! By investing for the long term, by trying to envision your life in 10 or 20 years you can have a portfolio generating higher and higher dollar profits.

Furthermore, women are ideally suited for investing. I say this because women aren't afraid to ask for directions...and you'll need to dig for plenty of information when picking your stocks.

Women also understand cycles...very well I might add. Pick a handful of stocks from each sector. Look at their charts from the past 5 years or so. Notice the changes. Notice the cycles. Now, while I don't recommend trying to predict a cyclical dip, remember that what goes up generally does come down, at least once in a while. Women like to shop. They like to hunt for a bargain, at least most women do. And while I don't recommend buying the cheapest stock, do your homework. You'll find some great opportunities to buy some great stocks. Don't be put off by "popular" opinion. If a stock looks stable to you, if you know the sector well, and if you have done enough research to believe it's a good buy, stick to your guns. It could pay off in the end. If you stay with a long term plan of action, it generally will.

So how do you pick those stocks? Well, although most financial and investment advice is still very dry..."How to prepare for your retirement", "How to save for your child's college education."; "How to balance your checkbook". There are a few beacons out there that can help you on your way. The most important thing you will learn about investing in your quest is that it's fun! It is so much more fun to watch a portfolio grow then to watch the cash flow out. And it can be as simple or as complicated as you want it to be. The answer, then, to the question, why invest? Is how can you not?

Michelle Kennedy is a freelance writer, the Founding Editor of The Money Maven, and the mother of four homeschooled children.