3 Investment Options for Busy Women
I want to grow my money, but I’m busy, how can I invest?
If you're anything like me, you got a million things on your to-do list. I have a business to run, doctor’s appointments to schedule, and a home to keep from falling apart. Growing your money is a part of financially thriving. The biggest problem for many busy women is finding the time to invest. Luckily, there are plenty of investment options for busy moms.
First, investment options for busy women start with making sure you have a solid financial foundation BEFORE investing. The first key to financially thriving is managing money. Without a strong money foundation, you will underestimate expenses and eventually get hit with a cost that will force you to drain your investments, essentially draining your financial goals.
BEFORE investing, you should be doing the following:
Budgeting for current expenses
Saving money to cover upcoming expenses and for emergencies
Paying off your credit cards in full monthly
Once you have a solid financial foundation, answer the following four questions:
What’s the purpose of the money you’re investing?
When will you use the money?
Are you comfortable with market volatility?
How much time do you have to invest?
If you are short on time and money, consider focusing on simple, time and money-saving investment options for busy moms, such as:
Your employer’s retirement plan
Online investment advisors
Asset allocation funds.
Please Note: The information in this blog is meant for educational purposes only. The information is not intended to be used as investment, tax, or legal advice. If you are looking for investment advice, I encourage you to talk to a financial professional.
INVESTMENT OPTION FOR BUSY WOMEN #1: YOUR EMPLOYER RETIREMENT PLAN
Your employer's retirement plan is busy women's #1 investment option. Your employer’s retirement plan is one of the easiest ways to invest for a long-term goal like retirement. This is because the savings come automatically out of your paycheck. Get the most out of your company retirement plan by doing the following:
Run a retirement projection.
First, run a retirement projection. A retirement projection is an estimator that tells you how much money you’ll have by retirement. Some projects will estimate based on your salary, possible Social Security benefits as well as your contributions, and average investment returns.
If unsure, contact your 401k plan provider for details.
Decide if your contributions will be to a Roth vs. Traditional (if you have this option).
Some 401k plans allow you to contribute to your retirement plan with pre-tax (Traditional) or after-tax (Roth) dollars. Which one you choose depends on your preference and circumstances.
If you have to write a check to the IRS every tax season and think you'll owe fewer taxes in retirement, then a pre-tax option may be a consideration to help you lower your tax liability now.
On the other hand, if you get a huge check and worry about owing taxes in retirement, then a post-tax option may be a fit.
You can typically choose both options if you are unsure. This means you will have a portion of your contributions sent to a Traditional AND to a Roth retirement plan. You can use calculators like CALXML to compare the difference between contributing to a Roth vs. a Traditional retirement plan.
Get your full match.
At a minimum, you should contribute enough to your entire company match. Amounts of your company match can change, so verify you are getting your full company match.
If you’re not, that’s free money to help you retire you’re leaving on the table. Consider increasing your contributions to get all your company's free money to help you retire.
Increase your 401k contributions with an auto escalator.
Ideally, you want to fully contribute to your 401k plan, which in 2021 may be up to $19,500 (50+ can add $6.500). If this is not possible, start with an amount you can easily contribute, even if it’s only 1%.
Remember, if you contribute to your company’s retirement plan pre-tax, you may not see a big difference in your paycheck since the money comes out of your pre-tax income. You can use calculators like Bankrate’s to calculate your contribution’s impact on your take-home pay.
Do a risk tolerance assessment.
One of the best investment options for busy women is the one you will stick with through stock market ups and downs. Risk tolerance is a fancy way of saying, “let’s find out how many ups and downs you can handle in the stock market before you’re ready to throw yourself out of a first-floor window.”
Knowing how comfortable you are in good or bad markets helps you choose an investment mix that won’t make you nervous when you hear the market’s dropped.
The danger of selecting investments that are riskier than your tolerance is that you may panic and sell the second the market temporarily drops. As a result, you may miss out on the market gains that typically happen afterward. Consider choosing investments you can mentally tolerate when the stock market goes up AND when the stock market goes down.
Automate your retirement investments
A retirement plan investment option for busy women is options that simplify investing, like an asset allocation fund or using your retirement plan’s online investment advisor services (if available). We review both options in more detail in the next few sections.
INVESTMENT OPTION FOR BUSY WOMEN #2: ONLINE INVESTMENT ADVISOR
Online investment advisors are also called Robo advisors or automated investment advisors. These types of programs use a combination of client-completed questionnaires and statistical data to help people create an investment plan. The programs also help investors select, monitor, and update their investments. Many Robo advisors use the same software as human advisors for a fraction of the cost.
Because everything is automated, online investment advisors are typically inexpensive with a typically low dollar required starting amount. If you desire a human touch, no worries; many online advisor programs offer an option to work with a human advisor.
Online investment advisor investment portfolios are typically made up of mutual funds or exchange-traded funds (ETFs). Online Investment advisors are a time-saving, inexpensive investment option for busy women.
Investopedia has a list of various online investment advisors.
INVESTMENT OPTIONS FOR BUSY WOMEN #3: ASSET ALLOCATION FUNDS
Another investment option for busy women who want simplicity is an asset allocation fund. Asset allocation funds have a diversified mix of several investments, all inside one mutual fund. Typically these funds are made up of a mixture of stocks, bonds, and cash investments. They may have domestic and/or international investments.
Many asset allocation fund companies create each fund to be your only fund.
The overall investment goals of the fund are typically in the name of the fund. Below are a few different types of asset allocation funds:
Target Date Funds (Life Cycle Funds) or Age-Based Funds) are pre-mixed funds designed for investors retiring in the fund year.
Balance Funds are typically funds with an even or close to even mix of stocks and bonds.
Funds based on risk are premixed based on an investor’s risk tolerance level. You may see the funds named conservative funds, aggressive funds, or moderate funds.
These funds are available through most employers’ retirement plans, college savings plans, and investment accounts like Roth IRAs.
IN CONCLUSION
There are plenty of investment options if you're short on time, money, and investment knowledge. Do not let time and money stop you from investing. The key to growing money is consistency, not the amount you’re investing.
Review the following options below to develop an inexpensive and time-saving investment strategy:
Maximizing your employer’s retirement plan
Asset Allocation Funds
Online Advisors
Last but not least, do your research. Be honest with yourse
