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3 Ways Women Can Build the Confidence Needed to Start Investing

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Don’t let self-doubt, lack of education or fear of failure hold you back from financial freedom

What would you do if someone handed you $1,000 in cash right now, no strings attached? You could do whatever you want with it — there are no rules. Would you buy that designer handbag you’ve always wanted? Would you put it in your savings account? Would you buy some silver? Would you launch a home-based business? Would you pay off some debt? 

Lexington Law recently asked people this very question: What would you do with an extra $1,000 in cash. The answer? Men are 35 percent more likely than women to allocate the money for savings or investment; women are 43 percent more likely than men to allocate the money to paying off debt. 

For decades, women have been labeled as savers rather than investors. Unfortunately, that means they are just sitting on the sidelines in cash — and, despite what you’ve heard or learned, cash is highly unlikely to put you in the position needed for retirement. 

In this day and age, there’s just no way you can save your way to a comfortable retirement. Why? Because people are living longer (and we, women, often outlive men), healthcare is more expensive, and the money you’ve been able to sock away in your savings and 401(k) won’t be nearly enough to cover everything without drastically reducing your expenses.

And is reducing your expenses really the way you want to spend your golden years? I knew long ago, that wasn’t going to be OK for me — I don’t want to spend my retirement pinching pennies and wishing I’d made different financial choices when I was younger.

Savers are losers

As we’ve said at Rich Dad for many years, savers are losers. If you think that sitting on cash will get you where you need to be when it comes to financial independence, it’s time for a wake-up call.

Here’s why that won’t work: taxes and inflation will kill you in the long run. That’s why saving money is a scam — which means you need to stop trying to save money and instead learn how to spend it properly.

Women are 43 percent more likely than men to allocate the money to paying off debt.

The saying, “You’ve got to spend money to make money” holds true, as long as you’re spending it the right way: on investments. But if you’re new to the world of investing, it can be incredibly intimidating. Where do you begin? How do you learn what to do? Who can you trust? Where do you find good deals? How do you know you’re making the right decision?

With so many unanswered questions swirling around, it’s no wonder so many women decide not to pursue investing — it’s certainly easier to say “forget it” and do nothing.

But each of these questions all point back to one truth: A lack of confidence will prevent you from ever moving forward. So the question becomes, as a woman, how do you boost your self-confidence enough to invest your money smartly and reach financial freedom?

The following are three ways that women can build the confidence they need in order to invest their money effectively for the long haul.

Start today, there’s no excuse. Don’t hide behind your lack of confidence to build the financial future you dream of today!

  1. Invest in financial education

    I get it: Putting your money out there can be a scary proposition. No one wants to make a gamble and then lose all that hard-earned cash you’ve built up over the years on a bad investment.

    So, a great place to start investing is in your own financial education. What does this look like?

    It starts with understanding that there are four distinct asset classes:

    • Real estate: Real estate investments either provide cash-flow from rental properties (the overage you make each month from rent once all your costs are paid) or capital gains (a one-time profit from buying and selling a property).

    • Business: Within this class, there are two routes to take: 1) invest in your own business or 2) invest in someone else’s private business or company. The goal is to generate a return back to you.

    • Commodities: Commodities include metals (gold, silver, copper, etc.) food (grains, corn, coffee, and sugar) and raw materials (oil, gas, cotton, etc.).

    • Paper assets: Paper assets include stocks, bonds, mutual funds, real estate investment trusts (or REITs), exchange-traded funds (ETFs), and retirement accounts where you can invest in stock options, stock futures and foreign exchange.

    Most people only think of paper assets when they think of investing. Unfortunately, for most women, this means giving your money over to a broker and hoping it is invested well, all while racking up fees, even when you’re experiencing losses.

    But there is a whole world of investing options out there both within paper assets and elsewhere that you can and should explore. Once you know that these four, very distinct, asset classes exist, you can begin to home in on what you are most interested in and then dig deep into that area to learn as much as you can.

    After some research and maybe even some first-hand experience, you’ll learn which asset class is right for you.

    As the old saying goes, with knowledge comes power. Once you are armed with the knowledge you need to invest wisely, you’ll begin to build the confidence you need to get in the investing game.

    The good news is that investing in financial education has little risk and a huge upside. It costs a little bit of your time. Begin by reading books, attending seminars and free classes, and reading the daily financial news to connect the dots. It’s that easy to start.

  2. Find a mentor

    At Rich Dad, we’re huge proponents of not only building your financial education but also getting a mentor who can help guide you as you build your financial IQ. No woman is an island unto herself. You need a community of people to help boost your self-confidence and achieve your financial independence.

    Join an investment club and start meeting with people who are like-minded when it comes to money and investing. You’ll be surprised at how much you start to pick up along the way.

    And with the right mentor, you’ll have someone to bounce ideas off of and gain insights from when you don’t have enough knowledge on your own to make the call. It’s an investment in relationships that pays off big time over the years.

  3. Get a small amount of skin in the game

    My first investment was modest by any measure: a small two-bedroom house in Portland, Oregon. At the time it seemed like a huge leap of faith, but in reality, the potential for loss was very small, just a few thousand dollars.

    I made $25 a month in cash flow, but it was the sweetest $25 I ever made. Finding that little house instilled in me a love for the hunt. It also gave me a much-needed boost in self-confidence. What I learned from that investment, however, was worth infinitely more. And the confidence I gained allowed me to move on to a new, slightly larger investment down the road.

    Today, I own thousands upon thousands of apartment units across the U.S., but I would never have gotten to this point if I didn’t take action and invest in that small single-family home in Portland many decades ago.

    Another option would be to invest in a small amount of silver — for just under $25 today, you can buy one ounce of silver and immediately become an investor.

    With the right investments in your financial education and by finding the right mentors, it becomes easy to take this step of putting your money where your mouth is. Then, slowly but surely, you’ll begin to build the confidence you need to make bigger and bigger investments.

Start today, there’s no excuse. Don’t hide behind your lack of confidence to build the financial future you dream of today!

Original publish date: March 17, 2016

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