When I originally wrote out the outline for this post, it was earlier in the pandemic. At that time, the business with Ukraine and Russia hadn’t materialized the way it has now, so things have clearly changed.
We seem to find ourselves in a bit of a recession or approaching one? Or a bubble? People are calling it different things, but let’s just say the economy has seen better days than lately.
I will approach these points from a purely personal perspective, keeping in mind that things are generally trending downward and people are understandably hesitant about investing right now.
Just a quick disclaimer: I am not a financial advisor and what I’m sharing is simply my experience and opinions
How I got started
Let’s start at the start. I’m a woman in my 20s in a STEM profession. I’ve lived in a comfortable first-world country my whole life and have what some people might consider a lot of education (9 ish years of post-secondary). So, I’m coming at this from a position of some privilege.
All that to say that despite being a woman minority, I still have a great amount of privilege when I speak on this and it’s important to acknowledge.
My mom remarried when I was in my teens and my stepdad came into our lives with much more financial wisdom than anyone in my family ever had (aside from my grandfather whose mantra is always to save as much as possible above all else).
He brought investing into my life. One day at the dinner table, he had all the kids download an investing app where we could “invest” dummy money to help us learn how investing works. I didn’t realize it at the time, but that would become an invaluable resource to me in the future.
Sometimes the hardest part is getting started. This was a completely 0-stakes way of dipping our toes into something that felt scary and risky.
How I learned more
There are a few ways I learned more about investing. The biggest one was probably DOING it. Once I actually bought some stocks on a trading app, I realized how it’s almost like any other transaction at the store. You can buy 1 share in a company for $5 for example, similar to how you might trade $5 to a grocery store for some food.
Above that, I started to get interested in personal finance to see how I can make my money work for me. I mainly used YouTube as a resource for information on investing (The Financial Diet, Steph and Den) and joined the Personal Finance subreddit for my country.
The personal finance subreddit was indispensable to me in that it made me realize how important saving for retirement is. I also realized that I was earning far below my earning potential. The subreddit for my country is very active and people regularly ask about real estate prices, salary, inflation, and investing.
Steph and Den helped me get the basics of the different types of investment accounts in Canada.
The Financial Diet YouTube Channel was a great beginner place to get me in the mindset of having healthy financial practices. It helped me see that I should be creating budgets and investing to grow my wealth as well as saving money. It also just helps you grapple with the cultural aspects of wealth like good and bad purchases, peer pressure, credit cards, etc.
Lastly, I learned about a book about investing from the Personal Finance subreddit. I got the audiobook for Millionaire Teacher and it changed my perspective entirely.
Prior to listening to the book, my strategy was to guess which stocks would perform well and to just hold on to them for a while. Through the book, I learned about index funds and low-stress methods of investing that require minimal oversight.
(Fun fact: a study was done on picking individual stocks and it was found that a CAT outperformed “experts” because no one can accurately “time” the market)
Millionaire Teacher also gave me valuable lessons about time in the market and how to use financial advisors if at all. It gives actual numbers and case studies so you can follow how different strategies work. I would listen to this book again for a refresher.
What I gained from it
I gained 2 main things from my investing journey so far: knowledge and comfort.
If I were to have written this post earlier in the pandemic, I would’ve also said financial gain. However, at the time of writing this, I am actually in the negative!! (in large part due to the markets falling dramatically in 2022).
That’s where the knowledge and comfort comes in. I know that historically, following a crash, the market will recover and surpass its former state. So I know to hold on to my shares and wait out this dip in the market while industries re-adjust to a world with Covid-19.
I know that because of my age, the time spent in the market will outweigh the losses I have currently and that they’ll pick up eventually. Also, because I’m young, I don’t need the money from my investments immediately, like I would if I were about to retire.
Having money in stocks (even if I’m currently at a loss) gives me a huge peace of mind because I know that I’ll be more comfortable in retirement because of it. I also know that because I have a large amount of money stowed away, if I’m ever having an emergency, I can pull some funds from there to help me out.
It helps keep my money somewhat out of sight so that I don’t have a sense that I can spend all of what I’ve saved. It has gone from a more liquid asset (like in my checking account) to something less tangible/accessible (share in a company).
When I started
I made my first investment when I was in my early 20s I believe. At the time, my primary was my stepdad. At the time, I only invested in 1 company and I sold it when a major political event was possible in the US that could affect stock markets.
Now, I deeply regret taking such a reactive approach to investing. If I were to redo that scenario, I would’ve just held on to the stock and then added in more index funds to diversify my portfolio.
At the time, I also didn’t understand the tax implications of investing. If I were to go back now, I would put a portion of my money into a retirement account as well because I would’ve gotten some money back during tax return season. I wasn’t aware of the concept of “contribution room” for investing accounts or where to look for them.
I took a highly flawed strategy to my first investment (not that there’s a perfect way). And I’m okay with that. It’s okay to make some mistakes within reason. I’m grateful that I started small so these mistakes didn’t have any huge implications.
A few years later (maybe at 27?) I had a steady job and started investing aggressively. I was equipped with my new knowledge from the various resources I mentioned above and was ready to dive in again.
At the time, I was living at home with my parents and had almost no expenses, so it was easily achievable for me to put 1/4 of each paycheck into my investing account. At the start, I was still investing in individual stocks, but after reading Millionaire Teacher, reading the Personal Finance subreddit, and speaking with a financial advisor through my work, I realized I needed to diversify my investments in case a company tanked. It would protect me from losing all my money.
I started to then invest more heavily in index funds (here’s a great resource on what index funds are), which are essentially basket stocks that hold shares from multiple companies big companies and reflect the performance of the market on the whole. That way, you can essentially expect your investments to follow the market trends and your net flow to be much less volatile. If one company goes under, you won’t be left with nothing because the others will serve as a buffer.
My strategy
Currently, I’m following the strategy I learned in Millionaire Teacher – for the most part. I’m still holding on to all of the individual stocks I purchased previously, but I’m making them a smaller and smaller portion of my investment portfolio. I’m just not contributing anything more to them.
Eventually, I may sell off some of them, but others are dividend stocks, which give me a small payout at regular intervals depending on how their stock is performing.
Now, I’m investing the majority of my money into index funds. I’m following the Canadian Couch Potato method. Essentially, I’m splitting my funds between top Canadian, US, and International stocks as well as Canadian Bonds. The percentage I allocate to each will change with my age (bonds are less volatile/risky, so I will invest more heavily in those as I get older).
It’s not always the most fun to simply invest in index funds, so I also have some “fun” investments. This is a very small percentage of my overall portfolio. I don’t believe it’s a good idea to spend much if anything on this because it’s riskier.
I consider my individual company stocks and my tiny crypto investment to be my “fun” investments. My expectation around those is that I can essentially lose everything. It’s essentially gambling. I wouldn’t suggest investing more in those types of investments than you’re willing to lose – the same thing I’d say to anyone who was going to a casino.
I would consider myself someone with a fairly high risk appetite when it comes to investing. Because of this, I shill a large percentage of my earnings into stock. Though it comes with some risk, it’s also mitigated by my age and the types of investments I’m choosing now.
I am also of the mindset of not treating stocks as a trading market, but more like a supermarket. Once I’ve invested, I don’t see my newly purchased shares as something I can trade back for a quick profit. I see it as something I’ve consumed and that is no longer available to me.
Even though I know that’s not entirely true, it helps me benefit from compound interest (time spent in the market makes your earnings compound). If I ever have to or am in a very financially comfortable place, I am open to selling off some of my stocks. For example, I will likely “borrow” some money from my retirement account when I want to buy a home (a concept called the Home Buyer’s Plan for Canadians buying their first home – they can withdraw from their retirement accounts without having to pay taxes on the withdrawal, but have to repay the funds within 15 years).
What it means to do this
It’s deeply meaningful to take on investing as a woman and a young person. Investing is a great way to take ownership of your finances and take it to the next level.
The way I see it, a sum of money that’s “at rest” (just in a bank account or cash) is actually decreasing in value because of inflation. Investing, in a way, is almost necessary just to keep up. Usually, salary increases are not enough to match inflation.
Investing is also something that is gate-kept in a way. Most people only get into investing when they have a generational knowledge transfer (or something similar) meaning they had to have been connected with someone educated on the topic.
This is a massive privilege! Not everyone comes from a background of people educated on the topic.
A lot of people also just let it happen in the background and don’t have much control over what’s happening. For example, letting your work make retirement contributions for you.
I do think this situation is improving with the democratization of information related to investing on the internet.
When it comes down to it, it’s really just a form of transaction like you’d make with cash or credit except that what you’re buying is a small chunk of a company or a bunch of companies (or real estate or other assets that tend to appreciate in value over time).
Setting and achieving goals
A great way to start is to come up with some near and far goals and to work toward those. These can be incredibly simple or incredibly complex. Whatever suits you.
For example, when I started, my goals were mostly to learn. I had very little clue about investing and what returns could look like or what the point even was.
Now I have some more solid near and far-term goals: I want to invest a set amount per year to max out my investment contribution room (set by the government each year) and I would like to retire early.
To make sure I invest consistently, I’ve set up an auto deposit from my checking account into my investing account. That way I don’t even have to think about it and I don’t miss the money since I don’t feel like I spent it, it just silently moves out of sight.
As for making sure I’m maxing out my investing room for the year and being able to retire early, I need to take some time to look at the numbers. I need to figure out how much I would want per year to feel comfortable in retirement. It’s kind of hard to think about in your 20s.
What does gender have to do with it?
This is a touchy topic. Reuters and Motley Fool have put out articles stating that women are more likely to save and less likely to invest. The Fool article research states that women lack investing confidence and cites that as a reason for lower rates of investment.
At the same time, both articles state that this trend could be shifting. Year over year, more and more women are investing and I think this is a very positive shift. The studies also found that investing confidence increases with age, so not all hope is lost there.
Women have been shown in study after study to outperform men. This is even more reason for women to continue investing and to shed the lack of investing confidence since it’s clearly unfounded!
I hope this article was interesting and useful to you. Please don’t hesitate to reach out if you have any questions about getting started!
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