If you are a woman who isn’t currently putting her earnings into investments, you are not alone. In a recent GOBankingRates study of 1,001 women, 57% of women said they are not actively investing. When asked why not, 37% responded that it was due to a lack of money, 7% said it was due to a lack of knowledge about how to invest and 13% said it was a combination of both of those factors.
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While not having enough cash to invest is a barrier, you can never invest too little. Kelly Ann Winget is the CEO, founder and fund manager at Alternative Wealth Partners. Winget’s website explains she works to give women the confidence and power to own their wealth journey. She said there are three investments that women should prioritize. If you haven’t started yet, don’t worry; there is still time to benefit from investments. Here is what Winget recommended you start investing in today.
Also here are four common ways women are investing to build wealth.
Save Some, Invest More
For the women who responded that they simply did not have the cash to invest, Winget recommended prioritizing savings first. Once you find room in your budget to save, move on to investments. “Find a balance in your budget that allows you to start investing more than you are saving,” Winget said. “Your cash loses value every day, especially in the high-inflation world we are living in today.”
You might think your best bet is to stash your money in a high yield savings account. Winget said, while that might be smart in today’s current financial climate, it could quickly change. “The high yield accounts are okay for now, but those can change any time as the Fed moves rates down.” Winget still said to start investing as soon as possible so your cash can grow exponentially.
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Tax Planning and Retirement Investments
There are multiple investments you could be making when it comes to tax planning that Winget said are very important to your financial portfolio and your retirement. In order to do this, Winget recommended either learning the tax code for yourself or hiring a tax professional that can help you figure out the most strategic investments for you to make based on your specific financial situation.
“Paying 20 to 40% or more of your income in taxes every year eats away at what you could be putting into savings, investments and retirement,” Winget said. “Figuring out your tax and estate plan is step one in retirement planning. Being set up structurally [by] having a trust, estate plan, holding company, life insurance, etcetera, is the most important part of all of this.”
Some key investments to take advantage of that can help you save for retirement are any employer-sponsored 401k plans, especially if they offer a matching component. This is basically where the employer offers you free money, so long as you contribute a certain amount.
If you don’t have access to an employer-sponsored 401k plan or if you want to bulk up your retirement savings even more, consider opening an IRA (individual retirement account). There are three different types of IRA accounts you can consider. A Traditional IRA works by enabling you to invest the money tax-free and potentially taxing the money when you withdraw it in retirement. A Roth IRA works by investing money that’s been taxed already, so it’s tax-free when you withdraw it. Finally, a SEP IRA is tax-deferred like a Traditional IRA, but is set up by a business owner or someone who is self-employed.
Alternative Assets
“When it comes to saving for retirement, the old ways aren’t going to get you there,” Winget said, referring to simply having one investment. Instead, Winget recommended investing in alternative assets to boost your financial portfolio. “Alternative assets have been used by high-net-worth, ultra-high-net-worth individuals, family offices, endowments and pension funds to protect and grow wealth since the beginning of time,” Winget said.
Some examples of alternative assets include hedge funds, real estate or other tangible assets and private equity. Hedge funds are usually reserved for very wealthy individuals who are accredited investors, but if you happen to fall into that class, you can research funds that are looking for new investors. Private equity refers to companies buying and selling companies, which is not very feasible for an individual.
Real estate is a more accessible investment that not only helps grow your wealth, but could help grow your family’s generational wealth as well. It’s also an investment that is somewhat protected from inflation. Since real estate prices tend to rise with inflation, your property tends to earn more value during these times.
If you are able to, it’s ideal to buy a second home in addition to your primary residence so you can earn passive income renting it out. Owning real estate offers tax benefits as well. You might be able to deduct the interest paid on your mortgage and depreciation.
If you can’t invest in real estate specifically, consider real estate investment trusts (REITs). A REIT is listed on major stock exchanges and enables investors to earn money without having any responsibility for the real estate the trust is tied to.
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This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 3 Investments Every Woman Should Make To Grow Their Wealth
