If you shy away from investing, you aren’t getting the most out of your money. The typical savings account interest pays a lowly .06%.
Suffice it to say, that’s insufficient for keeping pace with inflation.
However, you don’t have to cozy up to the Wall Street Journal every morning over coffee — assuming you have time for such luxuries as a working parent.
Here’s a quick overview of what moms should know about investing to get the maximum value from their savings dollars.
1. It’s Okay to Risk — a Little
Some people get plain obsessive with investing, watching every minor stock market fluctuation and reporting their projections on social media.
Sometimes they’re right, other times, wrong — but my, do they sound stuffy and intimidating. It’s no wonder many people look at the market as if it’s as risky as a Las Vegas casino.
The real lowdown is this: your money grows best when you invest it in businesses that do the same. Before you roll your eyes and say, “I do have to study,” you get Cliff Notes for this quiz.
They take the form of mutual funds with professional advisors who decide where to best invest for you based on your risk tolerance and preferences.
You can even find funds that give back to causes you care about, letting you increase your charitable impact as your money grows.
You don’t need much to get started, either. You can find funds with a minimum of around $50. If that seems like a lot, think of it this way.
You probably don’t bat an eye at dropping $2 to $4 each week on a lottery ticket — and your odds of recouping your money aren’t the hottest.
Drop $100 in a mutual fund with an 18% one-year return and you’ve made enough for a month’s worth of lotto luck, plus kept your original capital.
2. Save Toward a Home First
The point of investing is financial security. If you haven’t paid attention to the real estate market and rent, please do so.
Skyrocketing increases are leading to more folks becoming homeless every day. It’s tough enough to live rough solo — it’s a downright nightmare with children.
However, the gap between what companies pay and what it costs simply to exist continues to grow, with no sign of help on the horizon.
Your home should be your first and biggest investment.
A fixed-rate mortgage ensures your costs don’t go up when your landlord decides they want more money or sells your unit.
If you’ve ever struggled with housing insecurity, you know there’s no way to put a price tag on the peace of mind that comes with knowing you and your kids will always have a place to hang your hat.
Buying a home can even help you pay for your kid’s college tuition. Many home equity lines of credit feature lower interest rates than student loans.
3. Automate Your Savings
Even if you get savvy with investing, you need liquid cash to cover emergencies or risk running up high credit card bills. The best way to save is to make it automatic.
Take full advantage of your employer’s retirement plan. Are you an entrepreneur or contractor? New IRS rules let you sock more away for retirement than ever without a penalty.
Another trick is having your company’s HR department split your paycheck between two accounts.
Decide what percentage you’d like to put away each pay period and have that amount flow directly into your savings.
It’s much easier than disciplining yourself to make that transfer every other week.
4. Keep Emergency Cash Separate
Here’s another tip if you struggle to amass so much as an emergency fund: Have your income from a second job or gig direct deposited into an account that you don’t connect to any others.
Refuse a debit card — make it that you must travel to the branch to withdraw funds.
You’re less likely to dip into your savings “just this once” if you have to drive across town and wait in the lobby to do so.
Most experts recommend stowing away at least three to six months’ worth of income — but that mountain can seem like Everest if you’re one of the many Americans struggling to eke by on less than $20 an hour.
Please note that something is always better than nothing. Instead of throwing up your hands, consider it an investment in yourself, even if you only dedicate $5 a week.
5. Never Stop Learning
The world’s economy is ever-changing. For example, the reality of climate change means even today’s experts don’t know what the market will look like in five years.
Businesses that don’t step up their green game may disappear from the big board.
You don’t have to rip your hair out trying to become a financial advisor, but keep your eyes and ears open. Remember, learning is a lifelong process.
Pay attention when that table of suits next to yours starts talking stock tips — eavesdrop and Google what you don’t understand.
Touch base with the company handling your investments at least once or twice a year to update them on life changes and your comfort level with risk.
What Moms Should Know About Investing
Investing is scary and intimidating for many. However, if you do your homework by consulting stock research websites for finding investments it will become far less daunting.
Now that you know what moms should know about investing, what will your next steps be?