Investing doesn’t need to be complicated or expensive. You don’t have to spend loads of time reading books or attending night classes. If you’re doing the hard work of kicking a$$ in your career, you probably don’t have extra time to spare, anyway.
Contrary to what you may have heard about being a “good” investor, there are only a few simple rules. Stick to these, and you’ll be investing like a boss in no time.
All investing involves risk — if it didn’t, you’d just be “saving,” earning almost zero return, and actually losing money over time. The key is reducing risk with investing, and one of the most effective ways to do this is to diversify across different asset classes, like US and international stocks, global bonds, and real estate.
True diversification means that over a given time period, some investments will be up and others will be down. Since we can’t predict where the market is headed or which investments will perform the best, we diversify. Ellevest allocates across 21 different asset classes in our goal-based portfolios, to reduce risk.
As financial markets move over time, your portfolio may shift away from its original allocations, so we recommend reviewing it once or twice a year to check if it needs to be rebalanced. At Ellevest, we rebalance your portfolio automatically as needed.
Keep Costs Low
Since markets are unpredictable, we know we can’t control them. One thing we can control? Fees. And the research shows that fees are negatively correlated with investment performance, meaning funds with the highest fees generally do worst, and vice versa. What’s a low fee? We believe you shouldn’t pay more than 0.20% overall for the funds in your portfolio, and if you use an advisor, no more than 0.75% in advisory fees.*
Don’t Try to “Play” the Market
Buy low! Sell high! We’ve all heard those not-so-useful investing clichés, usually in cartoonish depictions of Wall Street. While market timing — knowing when the market will be “low” or “high” — is the holy grail of investing, it’s nearly impossible to do. Very, very, very few people can time the market well, and even fewer can do it consistently.
Okay, say you’re a competitive spirit. Here’s your game plan: Routine investing over time in every type of market climate is the best way to “play” the long game. Which leads us to the next rule…
Make Investing a Good Habit
Invest regularly, whether it’s with every paycheck, every week, month, or quarter. Make it a routine like brushing your teeth or wine o’clock on Fridays. Nearly 3/4 of Ellevest clients invest this way, with recurring deposits set up.
Keep it Simple
There are literally thousands of investments to choose from these days. Some try to predict which stocks will do the best in the coming year, others try to choose asset classes that will outperform, and some have strategies with made-up names I can’t even pronounce. Research shows, however, that straightforward, low-cost index funds outperform nearly all of those strategies in the long run. That’s what we use at Ellevest — in this case, we think the simplest solution works best.
The management fees charged by traditional advisors typically ranges from 1%-2%. Ellevest's fee is 0.50%. Fund fees are charged by the underlying fund manager, for the management of the fund. Advisory fees are charged by investment advisors, such as Ellevest, for ongoing investment advice and portfolio management for the account.
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.