Women Building Wealth? Yes, Please!

By Sallie Krawcheck

If you’re like many women, you take real pride in making your own money. And you should because you’ve literally earned it.

But earning and saving aren’t the only things your money is good for — investing may make a heck of a lot of sense for you, too. And I’m not just talking about your 401(k) (good for you for contributing) or your IRA (another thumbs up).

I mean investing in you. Building wealth so Future You can have the chance to get even more bang for each buck you earned during your career.

At Ellevest, we’re all about something called goal-based investing. That’s because we learned in 200-plus hours of research while building the platform that women want to invest in order to achieve something, rather than just for the sake of investing itself. Most of our investment goals are concrete: buy a home, start a business, retire well.

But we also have a goal that’s all about you.

We call it "Build Wealth," and it’s pretty straightforward. This is about investing over the long term to grow your net worth. Then you’re free to use that money however and whenever you see fit.

Thinking About Future You

Here’s the deal: As a woman, the gender pay gap can work overtime to ensure that you take home less money than your male peers. It’s not fair, but those are the facts. While a raise can help you make up some of the gap (and you should definitely ask for one), investing is another way to potentially build wealth over time.

This is about investing over the long term to grow your net worth.

Which is what our “Build Wealth" goal works to help you do. You do your thing: initially depositing 25% of your investable assets — savings accounts and taxable investment accounts — and then continuing to make monthly deposits that equal 5% of your salary. Before you go “Deposit how much, Ellevest?!” — this is just a starting point; deposit recommendations can be adjusted based on how much you want to invest and how you’ve prioritized other goals.

And we do our part: putting together a mix of exchange-traded funds (ETFs), which are diversified baskets of securities that are built like mutual funds but trade like stocks, and cash into your customized portfolio. For “Build Wealth,” we’ve chosen 15 ETFs for your portfolio — though the exact composition of ETFs recommended in your customized portfolio depends on your financial profile.

We choose stock ETFs that are individually diversified and complement each other within your overall portfolio. So we hard pass on crazy things like super risky, flashy, triple-leveraged ETFs and give you ETFs that offer broad, low-cost exposure to the stock market.

Your customized portfolio also includes an allocation of bond ETFs. These investments offer you the fixed-income benefit of regular payments, plus the added bonus of diversification — each ETF is a basket of different bonds — and lower costs. (Are you sensing a theme here?)

The last component of your portfolio? Alternative investments. These are ETFs in real estate investment trusts (REITs), which also offer income and diversification.

And as time goes on, we adjust your portfolio composition to minimize your risk exposure and bring you closer to reaching your goal.

What “Build Wealth” Looks Like In Action

Let’s say you’re 31, making $85,000 a year, have no existing investable assets, figure “Hey, it’s about time I put me first,” and choose the “Build Wealth” goal. If that’s your only goal, we assume that you start with $0 in your Ellevest investment account — so no one-time deposit — and then contribute 20% of your monthly salary, or roughly $1,400, to the account every month. According to our estimates, you could have around $577,000 in your portfolio at the end of 20 years, or $1.1 million after 30 years.*

And no, those aren’t some random numbers we pulled out of thin air. They’re what we call your “goal targets” — and if you make the recommended contributions, you’ll likely hit those targets, or better, in 70% of forecasted market scenarios.

By the way, that 70%, just like your goal target, didn’t come from some late-night fuzzy math session. We use Monte Carlo simulation — a forward-looking computer algorithm that forecasts hundreds of different market scenarios — to see how your recommended investment plan will perform in various economic situations. And the ETFs we pick, along with the monthly deposits we recommend, put you on track to hit that forecast, or better, in 70% of markets.

In contrast, if you put some of the other advisors out there through a similar exercise, they might come up with a higher projection for your portfolio. “Whoa,” you may say. Before you give us side-eye, here’s the deal:

Some other advisors have you reaching that higher projection in 50% of market scenarios, rather than our 70%. So our account forecasts may appear less optimistic than theirs; but we’d rather be conservative and show you a forecast that we believe you may achieve in more markets. This is one case in which bigger is not better; we believe our forecasts can enable you to plan with greater confidence thanks to the higher likelihood of you reaching the goal targets we project for you.

But we don’t stop there. In our goal targets for you, we also account for how inflation, realized capital gains, and taxes from interest will impact your portfolio. (Chief Investment Officer Sylvia Kwan spent a year researching and developing the algorithms to keep our projections real). And just so you know, some other advisors don't factor taxes into their forecasts, which again makes them higher than the numbers we show; but they’re also less realistic.

After all this, maybe you decide not to invest at all. Well, what if you opt to put the same $1,400 in a savings account that is barely earning interest on a monthly basis? You’ll have around $340,000 in 20 years and $513,000 after 30 years. Which isn’t bad...but it isn’t $1.1 million.

Wait. What if we rewind and say you get a raise to $110,000 — so you’re making slightly more than the guys — and then select our “Build Wealth” goal. According to our estimates, after 20 years of contributing 20%, or a little over $1,800, of your monthly salary to your account on the same basis, you’ll have approximately $743,000.

The savings account-enthusiast version of Hypothetical You? She’d have just above $440,000.*


You’ve Earned It—So What’s Next?

Yes, we’re hard at work creating smart portfolios for you, but we’re not the only ones on the grind here. We know you’re working hard, too — building your career. And we love that. But when you invest that money you’ve been working oh-so-hard to earn, you’re saying yes to the prospect of building to a whole lot more.


We assume the savings account yields a 1% average annual cash return and has no account fees. The “Build Wealth” goal investing results assume 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 40-year horizon. These results are determined using a Monte Carlo simulation—a forward-looking, computer-based calculation in which we run portfolios through hundreds of different economic scenarios to determine a range of possible outcomes. The results reflect a 70% likelihood of achieving the amount shown or better, and include the impact of fees, inflation, realized capital gains, and taxes on interest.

The projections of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Information was obtained from third party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.

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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Sallie Krawcheck

Sallie Krawcheck is the Founder & CEO of Ellevest.