"As more women invest, we will demonstrate through a show of force that we believe in each other enough to invest in each other — whether we can invest $1 or millions. We will do this by choosing investments that advance women and help improve our world. We will commit 25% of our investment portfolios to “impact investments” by 2025." — Let’s Disrupt Money
Investing itself, we’re in favor of. (You might have picked up on that, since we’re a company named Ellevest.) Especially investing in low-cost, well-diversified investment portfolios. That’s because — we’ve said it before, and we’ll keep saying it — we really, really need to fix the gender investing gap. Women don’t invest as much as men — we keep 71% of our money in cash (in other words, out of the market). This is part of the reason that we retire with two-thirds the money of men (even though we live longer).
It probably shouldn’t be surprising that women aren’t investing as much: The financial industry is still one of the biggest old-boys’ games in town. Don’t believe it? Check this ratio: Financial advisors and traders are 86% to 90% men. That leaves the 70% of women who say they would prefer to work with a female Financial Advisory without all that many options.
Oh, and by the way, investing the guys’ way hasn’t been working out so well.
Hey, you may say, all money is green, right? Maybe we just need to ignore the old-boys’ game and go with the most talented “stock picker” we can find — one with, say, a five-year history of success? Well, that’s the thing. Playing “beat the market” and “pick the winner” doesn’t work so well. It just doesn’t. Less than 0.1% of “active” fund managers were able to do it over a five-year period.
(So this is one industry in which high fees — which “active managers” charge — do not necessarily signal better outcomes. We believe that keeping costs low is the better way to go.)
How do we disrupt investing and work to make it fairer for, and more accessible to, women?
There’s a different way to invest.
It’s called impact investing, and it is designed to deliver competitive investment returns — while also working to effect positive social and economic change. Our Ellevest Impact Portfolios are designed to do this by advancing women; it is our view that what is good for women is good for the economy and society… and what’s good for the economy and society is good for women, too.
So, if you choose, you can direct your money at Ellevest to funds that invest in companies with more women leaders, and with policies that advance women. Companies that provide loans to support women-owned businesses and companies that provide community services — child education, performing arts, housing and care for seniors and people in need. Companies working to meet higher standards for sustainability (which has a greater effect on women) and ethical practices (same).
Important fact: This type of investing is not replacing money in the bank with flowers and woo-woo. Impact investing still has the potential to earn competitive returns.
Bottom line: It’s simply not a zero-sum game. Impact investing has the potential to be a win-win. Women investors having the opportunity to earn a competitive return, while directing their money to support women in leadership, women affected by environmental or social issues where they live and women working in their local communities.
We can disrupt investing. We can make a real difference.
We have the power to change the game. Right now. Women are controlling more and more wealth — between 2010 and 2015, private wealth held by women grew from $34 to $51 trillion; by 2020, we’re predicted to hold $72 trillion, or 32% of the total.
Let’s disrupt money by disrupting the way we invest, by committing 25% of our investments to impact investing by 2025. Because the support for this new, more thoughtful way of investing is growing; we think it’s only the beginning.
The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.
The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.
Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.
Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.