Why Women Should Invest and How to Get Started

Women are great at saving, but when it comes to investing, they lag far behind men. On average, women invest 40% less than men. It’s time to turn that around. Despite perceived barriers to entry, women can and should feel comfortable investing their money. With so many resources to help women research stocks and invest their money, there’s absolutely no reason not to get started today.

Why Should Women Invest?

Why aren’t women investing in the same numbers as men are? Some women may feel intimidated by the financial planning industry. Women are also more financially conservative than men and prefer to keep their savings in cash rather than invest in riskier stocks. But, this resistance to investing can have serious consequences for long-term wealth. 

You’ve heard of the pay gap (women in the US make 79 cents for every dollar a man makes), but the wealth gap in the US is even more substantial. Women hold only 32 cents in wealth for every dollar of net worth held by a man. Although there are many reasons for this, one is that women invest less than men do. 

Below are a few more reasons why women should invest.

To Grow Their Emergency Fund

Women need to invest their savings to maintain the value of that money. If all of your savings is in cash, you’re receiving very little return on those funds. The average return on savings accounts is only 0. 09%, and the average return on interest checking accounts is even lower at 0. 06%. 

You can make above 2% average yearly return by moving your cash into a high-yield savings account or increase your returns even more by investing in stocks, bonds and funds. If your money is sitting in a standard checking or savings account, you’re just leaving money on the table. 

A high-yield savings account can be a good choice for your emergency fund since there are no penalties for early withdrawal. Building your emergency fund will give you a financial cushion to handle job loss, unexpected medical bills, and major house repairs. 

To Reach Financial Goals

Women should also invest to achieve medium-term financial goals, like buying a house or paying their childrens’ college tuitions. These investments don’t have be available immediately, but they need to be accessible when you’re ready for them. 

To handle medium-term expenses, women need different types of investments they can easily access when the time is right. This can include stocks, bonds, money market accounts, or even CDs. This is money that isn’t locked in retirement; it’s money you can liquidate to cash when it’s needed. 

To Prepare for Longer Retirements

Women live on average 5 years longer than men so they face a longer retirement and the expenses that come with it. You should take your longer life expectancy into account when you’re thinking about your financial goals. Since your investment returns compound over time, the time to start saving for retirement is now.

Retirement savings accounts are, by nature, illiquid in the short term. Most retirement accounts, like IRAs and 401(k)s impose stiff penalties if you withdraw funds before age 59 ½. Still, it’s important to invest in them and plan for the long term.

How Can Women Get Started Investing?

Women can get started investing with a few simple steps. But, before you start investing your money, it’s a good idea to do a quick financial health check to make sure you have a well-rounded money plan.

Emergency Fund

Experts recommend that you have 3-6 months’ worth of expenses in an easily accessible account. You can put your emergency fund in a money market account, for example, because you won’t incur penalties for withdrawing the money when you need it. 

For an emergency fund, avoid putting money into a CD, IRA, 401(k) or any other account or investment that penalizes early withdrawal. The goal of the emergency fund is to be very liquid, even if the returns are lower. 


Life’s surprises can be very expensive, which is why insurance exists. Review your insurance coverage periodically to make sure that your major assets are covered. Typical insurance policies include:

  • Home
  • Health 
  • Auto
  • Term Life
  • Dental
  • Short-term and long-term disability
  • Additional liability 

Insurance covers you against extremely expensive, unexpected events. This will help you save your nest egg for events that aren’t insurable. 


You should pay off high-interest debt before you start investing. The logic is simple: 

The average long-term annual return of the S&P 500 is 8.18%, and less risky investments will yield significantly lower returns. On the other hand, you might be paying 15% or more in interest on high-interest debt. You’ll save yourself more in interest by aggressively paying off your debt than you will by investing your money. So if you want to start investing, pay off your high-interest debt first!

Set Your Investing Goals

Before you start investing, think about why you’re investing. Some people want to pay their kids’ college tuition, make a down payment on a home, or retire early. Others want to start a business or go back to school. 

Your investing “why” is important for two reasons. First, your financial goals will drive your investment decisions. If you’re saving for retirement, you can invest tax-deferred with a traditional IRA or roth IRA. On the other hand, another investment vehicle might be better for college tuition. When your goals are longer-term, you can typically invest in riskier instruments since you have more time to recover. On the other hand, if you want to buy a new house next year, your investments won’t have much time to recover if the market drops unexpectedly. 

Your “why” will also help keep you motivated. It can be hard to save every month, but it’s easier when you imagine that you’re paying $100 toward a future dream. Your “why” will keep you on track when you need some encouragement. 

Review Your budget

Do you have a budget already? If you do, now is the time to review it. Have you been spending within the limits of your monthly budget? Do you need to adjust any line items? Can you reduce some expenses and save that money instead?

If you’re one of the two-thirds of Americans who doesn’t have a budget, there’s no time like the present! Budgeting can seem complicated, but it’s all about knowing how much you make and how much you spend. Learn a little bit about different types of budgets, and choose one that seems realistic for you. You can also find many apps and tools to help you track your budget. 

Decide How Much You Can Invest Each Month

Once you’ve reviewed your budget, you should have a good sense of how much money you have incoming and outgoing each month. From there, it’s about finding ways to save instead of spend. Can you stop eating out, cut cable, or switch cable companies? Don’t forget about the other side of the equation. You may also be able to find ways to earn more money. Consider working on a side hustle a few hours a week to make extra cash. Anything that increases the net of income minus expenses means that you have more money to save!

Once you’ve analyzed your budget, choose an amount to save each month. This could either be a set number, like $500, or a percentage of your income, like 5%. If you have a pretty stable income month to month, it doesn’t matter whether you pick a number or a percentage. For people who have variable income, it might make more sense to commit to saving a percentage of your income.

Automatically Transfer Funds From Checking to Investment Accounts

Once you’ve decided how much to save, make it easy. Set up an automatic transfer each month from your checking account to your investment accounts. You won’t even have to think about saving! To protect your account from overdraft, make sure that you’re tracking your budget and have enough money to transfer to savings. You can also set up low balance alerts on your checking account.

Choose How to Invest

Once you have a game plan, it’s time to sit down and think about how you’re going to invest. Your plan might include multiple investment accounts, like emergency funds and retirement accounts. You can also decide how you’re going to invest the money in those accounts from highly automated robo-advisors to full-service financial planners. 


A robo-advisor is an online service that provides automated and low-cost investing services. Typically you’ll give the robo-advisor some information about your financial goals and risk tolerance. Then the algorithm will automatically invest your money and rebalance as needed. 

Most of the larger robo-advisors handle different types of accounts, including traditional investment accounts as well as IRAs and 401(k)s. A robo-advisor usually has low fees and lower account minimums, so they’re a great option for new investors. Best of all, for women who may feel unsure about making investment decisions on their own, a robo-advisor can help women invest easily and quickly. 

Low-Cost Online Broker

Online, low-cost brokers are for investors who feel confident investing by themselves. When you open an account with an online broker, like E*trade or TD Ameritrade, you decide how to buy and sell stocks, bonds and funds. The broker simply executes your trade orders. 

Fortunately, you can choose a very simple portfolio by investing in diversified funds. If you enjoy researching companies, analyzing financial data, and looking at historical stock prices, you might like using an online broker. Most online brokers charge per trade. Since women usually trade stocks less frequently than men, their online brokerage fees could be significantly lower.

Full-Service Broker

Intimidated by investing but know you have to get started? One option is to work with a full-service brokerage firm. These firms execute buy and sell orders. They also provide market guidance and research. This can be great for people who don’t feel like they know enough to start investing. The downside is that full-service brokers usually have high fees and high account minimums, so it won’t be cheap to get started with a full-service brokerage firm.

Work With a Financial Planner

A Certified Financial Planner can help you sort through all of the options, organize your accounts, and decide what method to use for investing. Financial planners help you identify and make a plan to reach your specific financial goals. There’s no need to feel overwhelmed. 

All CFPs have taken financial planning training and have passed an intense certification test. Most importantly, a CFP is required to act in their client’s fiduciary interest. That means that they will always advise with your best financial interests in mind (not theirs). Other financial professionals (like full-service brokers) may receive compensation when they make investment recommendations. This means that they are not required to act only in the client’s interest.

Start Today, Even if You Start Small

If investing sounds overwhelming, remember that you can start small. It’s fine to begin by putting $50 or $100 in high-yield savings account each month. Everyone has to start somewhere! From there, you can start saving more and dip your toe in the waters of index funds, stocks, bonds, and mutual funds. As a woman, you can and should take control of your financial future. Don’t be afraid to educate yourself and – above all – start now!