Ready To Invest? 7 Steps To Get Started

If there’s one gap I’ll work to help close if it’s the last thing I do, it’s this one: The gender investing gap. Have you recently read any of those articles on “top mistakes investors make?” You know, the ones about over-trading, falling in love with your winners, panicking in market downturns, over-trading some more, overconfidence, or checking your account too often and then over-trading?

Well, those are the mistakes men typically make in investing. The mistakes we women make? They’re completely different, and they don’t start with investing. In fact, they start with not investing in the first place. Of all the assets controlled by women, 71% are held in cash — a.k.a. not invested. When you leave your savings in cash, you may miss out on market gains that could be earned over time, and even worse — inflation will actually lessen your purchasing power. This is the precursor to the gender investing gap, and it’s not our fault. Honestly it’s not.

The financial services industry is filled with jargon and complexity. There are so many myths holding women back from investing. But when you break them down, you can see that investing doesn’t have to be risky, or scary, or designed only for millionaires. It’s a smart strategy that can absolutely be part of your financial plan, no matter how much you make.

So now that you know nothing’s holding you back from investing, here are the next steps to actually get started.

1. Choose A Firm That’s A Fiduciary 

Choosing a firm to manage your money isn’t like choosing a Saturday morning brunch spot. Even John Oliver will tell you that there are some firms that hold themselves to a higher standard than others. When it comes to your money, you want a firm that is going to put your interests ahead of its own.

Seems like common sense that anyone charging you a fee should be required to do so, right? Well, it’s not always the case. That’s why fiduciary is a keyword to search for when you’re looking for an investment firm or advisor. In a nutshell, if an advisor is a fiduciary, it means that the firm or advisor is obligated by law to act in your best interest.

2. Read The Resume Of The Chief Investment Officer 

Who’s running the firm’s investments, and how qualified is (s)he? You’ll want someone with experience and an investment philosophy that jives with your style of investing. At my company, Ellevest, it took me almost a year to find our CIO. One essential was that our CIO hold a Chartered Financial Analyst® designation. The title is given to those who have a minimum of 4 years of qualified work experience in making investment decisions and pass a series of intense exams.
I think it’s also helpful to find an investment-firm leader who has weathered a financial crisis or two — that way, you know she or he knows what to do if the economy gets rocky.

3. Do A Google Search

When evaluating a firm’s integrity, do an online search to see if the firm you are considering has popped up in the news for trouble with the regulators and if they have, for what?

Another best practice is reviewing the firm’s public records using a simple search on Every SEC-registered investment advisor is required to file a Form ADV and Part 2 brochure, both of which are required to explain important information in easily understandable language to its clients. Pay particularly close attention to the Part 2 brochure, as it discloses key information about fees. If you’re choosing a firm that is not an SEC-registered investment advisor, you can find the 4-1-1 using FINRA’s BrokerCheck tool.

Finally, check up on the experience and background of the Chief Compliance Officer. Compliance is all about making sure the investment advisor is doing right by the regulators and that the Firm follows procedures designed to help it serve the best interests of its clients.

4. Figure Out The Fees

When looking for an investing firm, be sure to ask about fees — while there are no guarantees on investment returns, fees are certain across the board. And I’ve seen no research to indicate that high fees correlate with higher investment returns; in fact, I’ve seen quite the opposite (that’s because high fees eat into returns). So it’s important to try to keep your fees as low as possible. Avoid paying more than 0.75% in management fees, and be wary of advisers who recommend investments with high fees.

What exactly are the fees? There are two types at most firms — advisory fees and investment fees. For example, most online platforms are paid 0.5% of the assets managed, while human advisors tend to charge around 1%.

Fees vary on investments themselves, but most Exchange Traded Funds (ETFs) offer low-fee investments that offer broad exposure to different asset classes. This allows you to build a diversified portfolio at a low cost.

5. Ask About Investment Options 

Are the investment portfolios available by your potential firm one of a few options (i.e., “you get one of our 8 pre-set managed ETF portfolios”) or are they customized? If you’re paying a management fee, it should be the latter.

An investment advisor should ideally take into account your individual goals — do you want to buy a house, start a business, or retire? And what does your timeline look like to do so? Having a conversation about what you want to do with your money — and not just how much money you have — should be an essential element in choosing the right advisor for you.

6. Make Sure Your Data Is On Lock — Literally

Security of your financial and personal information is paramount. When you’re investing online, you want to make sure that the company you invest with uses the highest level of SSL encryption (that means that your address bar says “https” and is green) and follows industry best practices. You should also make sure that the data you’re giving your investment advisor is kept secure.

7. Look For An Investment Advisor That Speaks To You

So many people try to make investing sound complicated. There’s a lot of jargon and a lot of different investment products and strategies out there. But at its core, it’s pretty straightforward: You invest in the financial instrument — stocks, bonds, or “alternative investments” — with a goal of putting your money to work to earn a return. In essence, with stocks, you are buying a small part of a company; if you buy their bonds, you are buying their debt. The fundamental principle is that, as the company prospers and grows, the investment in that company will reflect that. That said, all investing involves some risk; without risk, there is no possibility of return. That’s it. That’s investing.

Whether you choose a human advisor or an online service, the firm shouldn’t feel intimidating. Of course, there are plenty of nuances you’ll learn as you go. But you shouldn’t feel like it’s over your head now. A mistake I’ve often seen women make is thinking we need to understand everything about investing before we begin. (I had one woman tell me she was going to take off two weeks over the summer to figure it all out!) But what happens too often is that we don’t feel like we know enough, so we don’t invest.

Bottom line: Cross out your excuses for not investing. Make the decision to do it, find an investment-advisor firm you trust, and go for it. Think of it this way: You can’t afford not to.

This article originally appeared on Refinery 29

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