I've taught over 2,000 women how to invest, and I always give beginners the same 5 steps

Amanda HoldenDec 27, 2019, 21:13 IST

Courtesy of Amanda HoldenAmanda Holden.

After leaving a job in investment management in San Francisco, Amanda Holden now teaches women of all income levels to invest. She wants her students to know that investing is within their capacity.
Successful investing always begins with identifying the goal for the money. Then, you find the appropriate investments to match that goal, she says.
Investing for beginners is more accessible than ever. Holden advises beginners to find low-cost banks and investing options to get started and pursue ongoing education.
Need help with your own investing strategy? SmartAsset's free tool can find a financial adviser near you »

From cute co-eds in a sweaty sorority basement to fancy law firm execs to virtual students (fleece house pants and all), I've taught a lot of women to invest over the last three years. Over 2,0000, to be exact!

It's a journey that began not long after I quit my job working in investment management in San Francisco. After working with high-net-worth clients for six years, I quit to start my own business, called Invested Development. The purpose of this business is to get this critical information to the demographic that I care most about: young women, and anyone else who has felt left out of these conversations - because these conversations are so often reserved for men who are already wealthy.

Though I work with women at many stages of the wealth-building process, I spend lots of time with those thrusting themselves into the wacky world of investing for the first time. After years of honing my message, here's what I would tell them - and you - about what you need to know to get started.

1. Ditch feelings of shame

You would need an old scroll the size of a CVS receipt to list all of the reasons why women feel shame when it comes to money. Whether we have too much or too little, whether we spend money on lipstick or we don't, someone's got an opinion about it. I'm ready to leave all of this in the last decade. If our goal is to create more women with financial confidence and freedom, money shame needs to die a swift death.

I get this one a lot: I feel shame that I didn't learn to manage my money sooner. No need! You're learning about it now, and your future self will be so grateful that you did. Assessing your progress according to arbitrary age-related milestones will not help you to build wealth - and that's our only goal, here.

2. Believe that investing is within your capacity

Take one look around the spaces where investing is being discussed, and it's not hard to figure out why so many of us feel intimidated. I mean, spend a second visualizing the New York Stock Exchange: men, in expensive suits, screaming at each other in a large rotunda against a backdrop of flashing red numbers. I do not speak for all women, but to me this scene may as well be one of Dante's nine layers of hell.

For so long, investing has been relegated to domains that are purposefully exclusionary.

This leads many women to believe that investing is not for them, is too hard, or requires a ton of resources. All of these notions are untrue, as much as Wall Street would love you to believe it to be so. The world of investing can be decomplexified a lot quicker than you think, and there are now ways to get started with very small amounts. And no, yelling or condescending men need not be involved.

3. Start with your goal for the money, then find an investment to match

I'll often have women that will come to me and ask, "How should I invest my money?" And my response to that is always, "Well, what is your goal for that money?"

You need to look at your pool of money and ask yourself these three questions:

What is my goal with this money?
When do I need this money?
What kind of risk am I willing to take with this money?

Next, we take a look at the investing options that exist out there. Our goal is to find the investment or mix of investments that best matches up with whatever you are trying to accomplish.

And contrary to what it may seem - the investing universe can feel so vast! - there are actually limited options. So, we study those options, including how they usually perform in the short-term and in the long-term, to determine what makes the most sense given your goals and your timeline for your money.

For example, many people prefer stocks for long-term growth - returns are too volatile for the short-term. For a goal where you'll need the money in the next few years, cash is likely more appropriate.

So, if you're feeling stuck, your first order of business is to spend some time thinking about what it is that you want to accomplish with your money. Mentally separate your money into different buckets according to goals. Do you want to grow money for retirement? Do you want to save up for a down payment for a home? Are you building up an emergency fund? You investing strategy ultimately lies in these answers.

4. Find low-cost banks and investing options

When you're just getting started, the key is to keep as much money in your own pockets as possible. We aren't investing to make the banks richer, we're investing to make you richer.

In the world of investing, there are plenty of fees to keep an eye out for. Start with a bank you know won't charge you a monthly or annual account fee, like Charles Schwab, Fidelity, or Vanguard. If you've got a workplace retirement plan like a 401(k), investigate what types of fees are being charged.

Next, seek out low-cost investing options. One popular choice is index funds. An index fund invests you into a "whole" market for cheap. So, if after completing Step 3 you've decided that stocks are most appropriate for you, you could invest in a stock index fund. If you've determined that bonds are best in your scenario, you can buy a bond index fund. This is likely to be your cheapest way to broadly invest.

5. Commit to learning about what you're invested in

If you're going to be a successful long-term investor, you need to understand what you own and why you own it. This may sound obvious, but I worked for years with grown adult men who lost their marbles every time the stock market took a dip - and volatility is an inevitable part of stock market investing!

You shouldn't own an investment that you don't understand. The good news is, this education is absolutely within your reach. (Remember! See Step 2!)

Here are some of my favorite resources:

Personal Finance Club on Instagram
"Broke Millennial Takes on Investing," by Erin Lowry
The Stock Series, a free online resource by JL Collins
"The Little Book of Common Sense Investing," by John Bogle

You may also find it helpful to find community resources, classes, or groups. I'm a firm believer in the power of talking through this foreign-feeling information to make it stick. And as a bonus, the more we talk about building wealth within our communities - the more we all grow.

And for me, the ultimate goal is to create the maximum amount of women who have their own wealth.

Amanda Holden is a personal finance writer. Through her business, Invested Development, she teaches young women (and anyone who has felt left out of these important conversations) about money and investing. She writes a blog called The Dumpster Dog Blog, which is scrappy, no BS, finance education for young women.

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