Book helps women get into the swing of investing

May 20, 2021

Grow Your Money, by Bola Sokunbi, is part of a series from CleverGirl Finance on helping women manage money, in this case, investments.

And while women are the intended audience, there’s a lot of great advice for everyone in this well-written book, which while U.S. focused, does explain Canadian investing and retirement ideas as well.

Sokunbi starts by saying those who are fearful of investing should realize that “investing is like learning a different language.” And once you are familiar with that language, “you can get the hang of it, and really grow your money.”

After all, she notes, the only ways to make money are by working or investing. The latter can be a lot less difficult, the book notes.

Women, who traditionally earn between 58 to 87 per cent of what men earn, typically end up with $430,480 less than men over their working lives. “This is not okay,” writes Sokunbi.

Worse, while women are better savers than men, they tend to be very conservative, put 70 per cent of their savings in cash, and may not sign up for retirement savings plans at work, the author notes. That can mean leaving free money on the table, she warns.

Sokunbi provides an overview of the U.S. and Canadian stock markets, and then explains how compounding – whether it is interest, dividends, or capital gains – can help your investments earn more money. She explains the rule of 72 can tell you how quickly you can double your money through compounded rates of return – if you are averaging a five per cent rate of return, you can double your money in 14.4 years, she notes.

She sees a few conditions you need before starting off on investing, including have a steady income, the ability to meet your financial obligations, emergency savings, and no high-interest debt.

Good choices for beginning investors are managed mutual funds, index funds, and exchange-traded funds, she explains. With managed mutual funds, “a fund manager… make(s) investment decisions for the fund and set(s) the fund objectives, with the main goal of making money” for investors. Index funds are “passively managed,” where its component investments match the components of a market index. Exchange-traded funds are similar (passive) but may be focused on other market sectors and indices.

Index and ETF funds – passive – have lower investment costs, typically less than one tenth of one per cent. A managed mutual fund is generally in the one to two per cent range because you are paying for active management, she explains.

You can invest with a full-service broker, a discount broker, or an online broker/robo-adviser, she says. Again, fees are based on the level of service.

When researching what to invest in, look at the company or fund’s financial situation and future plans, its historical performance, its objectives and its expenses and fees, writes Sokunbi.

Another good idea is to practice before you put your toe in the water – most financial institutions offer “practice simulation accounts,” where you can try your investment ideas before you buy.

Things not to do include waiting around to invest (“time is your biggest asset and the best time to start investing is right now”), getting emotional with investing, timing the market, expecting “overnight returns” on investments and not thinking about taxes for the long term.

This is a great read. The tone is friendly and informative, there are charts and examples, and even testimonials to move you along from concept to concept. It’s well worth checking out.

The Saskatchewan Pension Plan operates much like a managed mutual fund, but with fees of less than one per cent. That low investment management fee means more money in your SPP account, particularly over time. Why not take advantage of the SPP as a key retirement tool today, as the plan celebrates its 35th anniversary in 2021?

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.

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