Ellevest

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New Year’s Resolution: Get Started Investing

By Ellevest Team

There are a million “reasons” to put investing off: You’re expecting a raise. You aren’t sure if you know enough to get started. Retirement feels a hundred years away.

But there’s a single, even more pressing reason why you should start ASAP (like, right now): $100 a day. $4 an hour. $3,000 a month. That’s how much you could miss out on by waiting to invest. (You can thank compounding returns for that one. Here’s how we calculated it.)

New Year’s Resolution: Get Started Investing

That’s why investing makes a great New Year’s resolution. Although we tend to use the term “resolutions” loosely — we like to treat them more like New Year’s intentions. Because resolutions are rigid, and they make you feel like you’ve failed if you fall off track. Intentions are more flexible — they say yes to progress, no to putting unnecessary pressure on ourselves.

So if your intention this year is to dive in and get started, here’s a roundup of our best advice to help you do it.

Resolution: Check off debt and saving to be free to invest

If you have high-interest debt, it’s probably going to cost you more in interest to carry that balance than you’d be able to earn by investing. That means it’s usually best to pay it off first. Here’s a little more about the difference between good debt and bad debt. Here’s how to decide whether to pay it off now or invest instead. Here’s an explainer on student debt and a game plan for knocking that debt out. Here’s our advice on paying off credit cards.

It’s also a good idea to build up an emergency fund before you start investing. That way, you’ll have a cushion in case something happens (like you need a last-minute surgery or your car breaks down or your source of income disappears). Here’s why giving that emergency fund a descriptive name can help you get there faster, and here are some guidelines as to what does and doesn’t count as a financial emergency.

Resolution: Get in the know

We’ve got you. Here’s our Go-Getter’s Guide to Investing. It’s pretty quick, because we firmly believe there are only a few things you need to know to get started.

But if you want to dive deeper, we can help you do that, too. Here’s an explainer on how investments make money. Here’s the lowdown on the difference between investing and saving. Here’s what you need to know about two major investing concepts: compounding and diversification. Here’s why now’s a good time to invest and why you should keep investing consistently.

Maybe you’re also wondering how Ellevest works, exactly. Here’s the gist: You give us some info about yourself, like your age, job, salary, and gender. Then you tell us what your money goals are, how much you need for each of them, and when you want to hit them. We take all that in, and we give you an investment plan designed to get there. Then all you have to do is set up your deposits, and we’ll take it from there.

Want more deets? Here are the tough standards we use to pick the investment funds we include in your account (aka ETFs — here’s what those are). And here’s how we make the forecasts we show you as realistic as possible so you can plan your real life. We’re a fiduciary, so you can rest easy knowing your best interests always come first in our book.

Resolution: Step up your retirement game

Building your own version of a dream retirement doesn’t just happen. The earlier you get started, the better. That’s especially true since women live six to eight years longer than men but retire with two-thirds as much (true, sad story).

So here’s an explainer to help you figure out how much you actually need to retire. And here are some helpful deep dives you probably didn’t know you needed: why you should get as much of that employer 401(k) match as you can, and what that whole “vesting” thing means, the difference between an IRA and a 401(k), an explainer on 401(k) rollovers if you’ve changed jobs in the past, the difference between Roth and traditional 401(k)s and IRAs, and SEP IRAs for freelancers and the self-employed.

Resolution: Invest intentionally

We’re big fans of intentional investing. The way we see it, that means three things: being intentional about why you’re investing (your goals), what you’re investing in (your impact on the world) and who you’re investing with.

A little more about those goals

Basically — do you know why you’re investing? Are you putting your money into accounts that can best help you get there? For example, maybe you want to:

Boom. Here’s to your money’s most powerful year yet.


Disclosures

Source Ellevest. To calculate “about $100,” we compared the wealth outcomes for a woman who begins investing at age 30 with one who began investing at age 40 after having saved in a bank for 10 years. Both women begin with an $85,000 salary at age 30 and all salaries were projected using a women-specific salary curve from Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc., which includes the impact of inflation. We assume savings of 20% of salary each year. The bank savings account assumes an average annual yield of 1% and a 22% tax rate on the interest earned, with no account fees. The investment account assumes an investment with Ellevest using a low-cost diversified portfolio of ETFs beginning at 91% equity and gradually becoming more conservative during the last 20 years, settling at 56% equity by the end of the 50-year horizon. These results are determined using a Monte Carlo simulation—a forward-looking, computer-based calculation in which we run portfolios and savings rates through hundreds of different economic scenarios to determine a range of possible outcomes. The results reflect a 70% likelihood of achieving the amounts shown or better, and include the impact of Ellevest fees, inflation, and taxes on interest, dividends, and realized capital gains. We divided the calculated cost of waiting 10 years to invest, $341,181, by 3,650 (the number of days in 10 years). The resulting cost per day is about $93.47. Dividing that result by 24 hours results in $3.89 per hour.

To translate that result into pay rates, we assume a 30-day month, resulting in a cost per month of $2,843. We then assume the average number of hours worked per month is 160 (40 hours per week multiplied by 4 weeks), resulting in an hourly cost of $17.77.

The results presented are hypothetical, and do not reflect actual investment results, the performance of any Ellevest product, or any account of any Ellevest client, which may vary materially from the results portrayed for various reasons.

© 2019 Ellevest, Inc. All Rights Reserved.

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.

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Ellevest Team

The Ellevest team is working to help women reach their financial and professional goals.