Newsletter August 23, 2017
No Woman Ever Made History by 'Playing it Safe'
Leadership is hard. And uncomfortable.
I used to have a boss who would say "It's better to cross the street in a crowd." By this, he meant we should mostly just do what others do, when they do it. He also meant: It's much harder to lead. To be first. To do something different.
Need proof? When Merck & Co. CEO Kenneth Frazier resigned from President Trump’s manufacturing advisory council, he got rebuke-tweeted at by Trump. Not the later ones. They were able to cross the street in a crowd.
Another observation: I have a colleague who noted that it historically hasn't paid to "do the right thing" on Wall Street. I've learned both of these lessons the hard way a couple of times.
But when we founded Ellevest, our team wrote core values that put you at the center of everything we do.
Even when it’s easier to stay in the pack and play the game the way others are playing it.
Here’s a great example: Other advisors claim that you can get "guaranteed" higher returns through “automated tax loss harvesting” — when in fact, taxes are not "saved” but only pushed later in time. And even that is not guaranteed — there is no guarantee in investing. (If you ever hear that word in investing, run far. Run fast. And if you ever hear "free," run farther, run faster.)
But it can be hard when Ellevest refuses to play this game.
As in this recent interview with a service comparison-ranking digital advisors:
Them: "Do you have automated tax loss harvesting?"
Us: "No, and let us tell you why we believe its benefits can be wildly overstated."
Them: "We don't have time. You're going to get dinged for this in your review."
Us: "But, please let us tell you OUR customized approach for minimizing taxes."
Us: "But but but…"
So we weren’t able to tell them that we don’t take a “one-size-fits-all-accounts” approach.
But we do implement tax-smart strategies to help reduce taxes.
This not only means investing in low-cost, tax-efficient ETFs, but also selecting which investments go in taxable and which in tax-deferred accounts; when rebalancing your portfolio, we sell investments with the largest losses and minimize taking capital gains, so more of your money keeps working for you.
We've also found that introducing new concepts to investing — like taking into account women's longer lives, introducing a service that works to get you to your actual goals rather than outperforming some market index, alerting you if you fall off track to reach your goals — that process of bringing higher quality and innovation to investing may not be immediately appreciated or fit onto an easy comparison page.
But I know that we aren't going to do the best job for you and close the gender investing gap by doing what everyone else is doing and simply trying to do it a bit better. Or just trying to be the "cheapest" out there. We are only going to do it by getting out of the herd and going deep on making a better product. A higher quality product. One that we build WITH you.
So while it would be easier for Ellevest to go along with the crowd — believe me, so much easier — we’re committed to building a company by helping you achieve YOUR goals, not letting reviewers tell us how to manage your money.
And that boss who wanted to cross the street in a crowd? He’s no longer in his job.
Co-founder & CEO, Ellevest
Paying Off Debt vs. Investing
First, ask yourself if your debt is “good debt” or “bad debt” — yes, good debt actually exists. In general, it’s debt with a low interest rate, like a mortgage at 5% or lower or student loan debt at 7% or lower. You don’t need to pay good debt off aggressively before you start investing. Then there’s good debt’s crazy relative: usually a credit card or personal loan with average interest rates of nearly 18%. This bad debt needs to be paid off before you invest; because whatever returns you are likely to earn investing in the market are very likely canceled out by enormous interest payments on that debt. Same goes for your emergency fund — carrying bad debt while building one makes it way more expensive than it should be.
Ask Sallie: Pie-Slicing Edition
This week, Sallie tells you a v. smart way to divvy up each paycheck, no matter how big or small.
#FinancialFeminist Action of the Week: Compile Your Greatest Hits
As we’re all barrelling toward Labor Day, Q4 will be here before we know it. Hopefully you had some down time this summer and spent some of it reflecting on work — now it’s time to make a list of all the amazing stuff you did since your last performance review. It doesn’t need to be super-detailed or articulate; just a running, shorthand summary to which you can refer so that your annual self-assessment, and your year-end review, will be extra diesel.
Term of the Week: Alternatives
This 90s buzzword had a brief renaissance recently when it became synonymous with not-quite-factual “facts” coming from the White House; but it’s a real thing when it comes to investing. If an asset is not a stock or a bond and it can still be part of your portfolio, it’s likely an alternative investment. These types of investments include real estate, commodities like gold and wheat, investments in start-ups or private companies, hedge funds, and natural resources like coal and gas...even art collections.
Make Another Woman’s Payday: Sarah LaFleur & MM.LaFleur
Even if you already luuuvvv shopping for work clothes (who are you?), Sarah LaFleur has turned the otherwise unexciting task into an easy and dare-we-say delightful experience. Her e-commerce platform, MM.LaFleur — which she cofounded with two other women — is your new go-to for work clothes. Answer a few very good questions about your personal style and sizing (they serve pretty much all shapes and sizes) and they’ll send you their signature Bento Box with polished, professional looks that are yours to keep or send back if they’re not your thing. You can also shop individual pieces that look just as legit at work as they do at cocktail hour.
Say It with Stats: Congresswomen Are More Productive & Collaborative Than the Guys
We’re sure your jaw is on the floor after reading that headline, but we’ll get into details anyway: A recent study of women in Congress one of the oldest, whitest, men-ist settings that we don’t have to imagine — reports that congresswomen think of themselves as more results-oriented than their male counterparts. The women would rather reach a mutually beneficial solution than “win” for the sake of winning. They’re more likely to reach across party lines to get things done, and in 2015, the average congresswoman submitted 26 more bills over a six-year time frame than her male counterpart. And the biggest takeaway: Women in Congress remain optimistic about the future and feel that, despite making up only a fraction of Congress, their voices are still heard. Inspo to keep keeping-on if you’re outnumbered by the guys at work.
All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third-party’s products or services.
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.
Information was obtained from third party sources which we believe to be reliable but are not guaranteed for accuracy or completeness.
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.