Sallie Krawcheck of Ellevest told CNBC that “The No. 1 investing mistake women make has nothing to do with where they invest.” In fact:
“When it comes to investing, the biggest mistake women make has nothing to do with where they’re choosing to invest their money — in fact, women tend to earn higher returns than men.
Rather, the issue is they’re not investing enough in the first place.”
When asked just who is her firm’s biggest competition, Krawcheck does not name another investing company; she says her competition is inertia. Women are hesitant to begin investing and when they do begin investing, they are hesitant about investing a lot of money.
She notes that women want to do their research and make sure they are investing in the right places…however between being busy and wanting to research, many women put off investing. And over time, they lose out on compound interest because of these delays.
She does discuss some budgeting percentages that she thinks are advisable, adding that it is difficult for some people to get to the point where they are investing 20% of their earnings. But she also notes that not investing enough and not starting sooner rather than later may be a bigger drain on a woman’s net worth than the gender pay gap.
In contrast to women, Krawcheck says that men tend to overtrade and be overzealous.
While Krawcheck doesn’t get into all the reasons why women do not invest more money, she does say the women tend to want to leave 70 cents of each dollar in cash. And you can imagine why: there is safety in having cash liquid and ready at hand. The risk of having money tied up in investments is one that many women feel they can’t afford to take,
If you are unsure about investing more or about investing at all, why not sit down with a Fee-Only financial planner? A planner who is not obligated to convince you to buy certain financial products can look at your financial outlook and retirement goals to help you find an amount you feel comfortable investing.