Let’s talk about risk.
It’s a given in investing that without risk, there is no return. In contrast, certainty feels, well…certain.
But the cost of certainty is high. How high?
If you save 10% of your income in a bank account and retire at age 67, we estimate you'll run out of money when you're 76. 
If you save 20% of your income in a bank account and retire at age 67, we estimate you'll run out of money when you're 85. 
The average current longevity for a woman who's 30 today is 87.
In contrast, it has paid off in the past to invest in the markets, even with ups and downs:
Average annual return on the stock market, 1928 - 2015: 9.5% 
Invest 10% of your income, retire at age 67, and we estimate you'll run out of money when you're 86. That's an additional 10 years of living comfortably in retirement. 
Invest 20%, retire at age 67 and we estimate you won't run out of money until you're 114. 
But how much investing risk should you take? And what’s your “risk tolerance?”
At Ellevest, we approach investing risk differently from others. We don’t ask you how much risk you want to take; very few people can answer this question accurately. As a fiduciary , we help you understand how much risk you can afford to take. (For example, if you don’t have an Emergency Fund built yet, no investing risk for you. If you are set on the near-term stuff and are shooting for a bad-a$$ retirement, you may be able to afford a good deal more risk, in order to earn a higher return.)
You can dig into this more here, in Rethinking Risk: The Ellevest Way.
But that rethink of risk is not all. We also build layers of conservatism into our offering, with our aim to give you a better chance of reaching your goals than others do. (Think taking into account your longer-than-men’s lifespan, among other factors…which really matter.) Read more here in Cool to be Conservative.
Another way to reduce investing risk?
Invest steadily: invest today, invest next month, invest the month after, invest the month after that.
That means you’ll likely buy low sometimes, and buy high other times (and it will only be clear in hindsight which times were which). Nearly three fourths of Ellevest’s clients invest this way, with recurring deposits set up.
There are no guarantees in life. There are no guarantees in investing. But, historically – even with market’s ups and downs – investing has been a means to building wealth. And that’s no bull.
We want to hear from you! Questions? Just ask. Opinions? Tell us what you think. Nell is standing by at Nell@Ellevest.com.
These figures assume a 30 year old woman earning $85,000 and saving in a bank account that yields a 1% average annual return with no account fees. We assume her income in retirement is 90% of her pre-retirement salary. 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.
Annual Returns on Stock, T.Bonds and T.Bills: 1928 – Current: http: //pages.stern.nyu.edu /~adamodar/New_Home_Page/datafile/histretSP .html
These figures assume a 30 year old woman earning $85,000 and investing 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. We assume her income in retirement is 90% of her pre-retirement salary. 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 include the impact of fees, inflation, and taxes on interest, dividends and realized capital gains.
Ellevest, as a SEC registered investment adviser, is a fiduciary and has a fundamental obligation to provide investment advice in its clients’ best interests.
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.