Do you invest?
I mean, not invest as in “invest in yourself” self-help malarkey, but invest as in actual cash, invested in actual stock markets?
Because not many women do. In the UK only 9% of women have stocks and shares individual savings accounts (Isas), compared to more than twice as many men (19%), according to Fidelity Personal Investing.
But the flipside of making the most of your money is earning extra. One of the advantages of a frugal lifestyle, if you’re able to live within your means, is that it frees up some spare cash. Spend less than you earn, and you can start salting away some money.
Returns on savings are rubbish
Right now, the rewards for sticking money in a saving account, are not great.
Interest rates on cash savings are rubbish (technical term, that). We all need some cash for emergencies, and I’ve blogged about how to squeeze extra interest from current accounts and savings apps. But interest on savings has been rock bottom for years. It’s virtually impossible to earn more than inflation – which means your money will buy less next year than it can right now!
Shouting about investing
Instead, I want to shout from the rooftops about investing, partly because I came late to the party. My parents didn’t invest, so I didn’t have a clue.
I dutifully paid into a pension at work, because that seemed sensible. But otherwise, I stuck with things that I knew: cash and property.
In my job as a journalist, I’ve even spent years writing about investing, quoting experts, but it never seemed relevant to me. The warnings loomed large: “Don’t invest money you cannot afford to lose. You can get back less than your original investment.” Who could afford to lose money? Why would I want to risk my hard-earned cash? Not me, oh no.
But actually, investing isn’t just for City types in braces, shouting ‘buy’ or ‘sell’ into phones. It’s not just for alpha males, willing to make or lose fortunes. It’s not just for squillionaires.
I wish I’d had someone I knew sit down and say “Look: I invested this. Here’s how, and here’s what it’s worth now. And yes, it went up and down. But I came out ahead – and by way more than if I’d stayed in cash.”
Because fundamentally, that’s why rich people invest. Invest some money and keep doing it, year in, year out and – KLAXON ALERT – you’ll get better returns than a savings account.
I asked for some stats for an article recently. If you had invested £50 a month, for the last 25 years – so not a lot for a long time – in the average investment trust, it would have generated a whopping £62,072, according to number crunching by the Association of Investment Companies. That’s four times more than the £15,000 you actually put in.
Yada yada it all adds up. Average this, average that, all very theoretical.
Getting started myself
So – deep breath – here’s my own experience.
A couple of years ago, I finally invested some of my savings. I realised that I viewed the hard-earned £28,600 odd in my cash Isa as money for retirement, a good 20 plus years away. (It’s in an Isa rather than my pension, so I could get my hands on it before hitting 55, if really needed)
Now the one investing statistic that really sticks out for me is that shares have delivered better returns than cash over 99% of all periods of 18 years in a row since 1899, according to Barclays.
99%! That’s a massive probability shares will do better long term! So thinking more than 18 years ahead flicked a switch that investing was right for my money.
A year later, on 24 September 2016, it was worth just shy of £33,600 – that’s 17% up.
Two years on, so 24 September 2017, and it had risen to just over £39,180, so again growing 17% in a year, and 37% since the start.
— Faith Archer (@MuchMore_Less) September 29, 2017
I’ve just looked, and today the balance is £40,890. (I had to check that number a few times, as it doesn’t seem real).
So while I’ve been scrabbling around on the reduced price shelves in the supermarket, buying yellow-stickered food, those investments generated more than £12,000. That’s a ridiculous amount of money. All I did was buy the investments and leave well alone. I can safely say it’s the easiest money I have ever earned. Hindsight is a very wonderful thing, but I wish I’d started earlier, investing small sums each month, rather than adding to a savings account for all those years.
There’s a couple of huge caveats here:
- No way can I expect to earn 17% every year. I’ve been incredibly lucky to be carried along by rising markets in the last couple of years. Over time, it will even out at a lot less.
- The value could also drop without warning – but long term, the general trend of stock markets is up, and short of the entire collapse of global capitalism, that’s likely to continue.
Do you invest?
Now, I’m not going to pretend I have all the answers, because patently obviously I don’t. I am definitely not a financial adviser. What works for me may well not work for your own situation and how much risk you’re comfortable taking. But perhaps that’s the point – I’m a married mother of two, I’m living on a limited income, and yes, I invest.
I reckon many people dismiss investing as not right for them, as I did. Yes, there are certain basics to get your head round, and the industry doesn’t help itself with all the jargon. I’d like to write more about what I did and what I learn in future, in a way that is hopefully easy to understand. The more we start talking about investing, the more others might weigh it up as a genuine possibility.
So anyone else care to out themselves, in an “I am Spartacus!” fashion? Yes, I’m female, and yes, I invest?
Because long term, investing can help make the most of your money, and women shouldn’t be missing out.
Follow up post: Investing for beginners