The name of the article seems to be the definition of a problem that hardly has a solution. But... What if the problem is a solution in fact? Let's find out how lack of time can be the advantage in investing for women.
Being a woman is not easy at the present time. We have our career; we want to develop our talents. Very often we are also carers. We take care of our families, children, parents or other relatives, friends. But we also have our needs. We need to recharge energy, we need to take care of our health, beauty etc. to feel good. To feel we are women, not just result deliverers. Sounds like 3 lives in one, doesn´t it? And fitting investing into it? Impossible… Or?
On the other hand, having financial resources is very important for us. When we have enough money, we have freedom. We have a wide range of choices. We are less dependent on others. We can choose:
But how to invest when time is even more precious than money sometimes? Let's start with a fairytale, surprisingly.
Once upon a time, there was a princess. We know her as Sleeping Beauty. You may remember, she had some trouble with the thorn of a rose, and she fell asleep for a hundred years. Nevertheless, in our story, Sleeping Beauty invested 1500 USD into the stock market before this unfortunate incident.
As you know, one hundred years later, a prince is coming to the sleeping castle, kissing our princess good morning and she's waking up – still fresh and young (surprise #1) and (surprise #2) with more than a million dollars on her investment account. How is this possible? If you are thinking about the point of looking young after 100 years, I recommend you contacting some biohacker probably, but if you are interested in the financial part, let's have a look together.
Let's start with facts – Sleeping Beauty invested only 1500 USD. Nothing else. No additional investment. No additional work – no reading, no thinking, no changing, no deciding. Just sleeping. How did this 1500 USD become more than a million over time? The answer is - compound interest. That's the Magic wand in our story.
Your money has an amazing ability to multiply – Even while you sleep. And you do not even have to be a Sleeping Beauty or any other princess. This opportunity is there for everyone who dares to take the first step. Invested money brings you a return - interest. And if you let them work for you, year after year that interest is higher as the resulting amount increases. And that's how thousands become millions. Don't you believe it? You can check this yourself through any investment calculator that is freely available on the Internet.
You just enter an initial amount of 1500, zero subsequent investments, an interest rate of 7 percent (the average return on the stock market), a horizon of 100 years and see how the magic wand works.
You may object that you don't have 100 years to wait like Sleeping Beauty. And that is fair. We usually have much less time left for our goals such as retirement or giving our children a good start into adult life. So, we must compensate somehow. We cannot just sleep for XY years, we have to contribute a regular amount to our investments, ideally every month. But this can also be arranged in princess style.
So what does my recommendation look like for women who don't have time to waste? I would summarize the approach in 3 steps – DECIDE, AUTOMATE, FORGET. Of course, you need to decide how you will invest. Subsequently, it is ideal to automate the entire process by creating a standing order and then ideally forget that you are investing.
Why is such a "passive" way of investing great? It will help protect you from yourself. Surprisingly, most mistakes in investing are not about mathematics, but rather about psychology. About the fact that you often make wrong investment decisions due to emotions - fear, panic, uncertainty, desire for more profit... That you sell the investment in a panic at the moment it loses - instead of sleeping peacefully like the Sleeping Beauty and waiting for the investment to grow back and further up.
Time-saving investing is the one, where contributions keep coming without your regular activity and then, ideally, you forget that you are investing. It is not about sloppiness, it's more about a quiet life where you rely on what you have created and trust the investment process.
You may be wondering if such passive investing yields less returns than some more active ones. I can maybe help with your worries. It may seem that the better strategy is to be active, to be interested, to follow new trends, to invest in the right tools at the right time... Yes, to some extent. But is it something we can count on? Is it worth spending the time? Not that much.
When investing, we always work with a certain risk, uncertainty. Even if we know the tools perfectly, we know how they work, we never know for sure what will happen. And even the biggest experts who spend all their time on investment do not have the crystal ball. Who am I talking about? About investment fund managers.
These people have the best investment in the job description. They devote all their time to it and choose the best investments for their clients to bring them maximum profit. Unfortunately, it turns out that even these experts are unable to overcome passive investing. And clients still have to pay them fees for their work.
Warren Buffett, one of the world's most successful investors, once made a bet with these experts, fund managers. He bet that their active investing would not beat passive investing. And he was right. You may have heard of terms like ETF or the S&P 500 index. What can these terms mean to you?
The S&P 500 is an index tracking the US market. It is actually a ranking of the 500 largest American companies. ETF is the name of passive funds that simply buy shares exactly according to this index and don't deal with it anymore - again a bit like the Sleeping Beauty. When the index changes, they change the structure of this fund, too. But nothing more. They do not think about it, they don't try to be smarter than the market. The market itself shows which company is good and worth investing in.
And as it seems, it pays off. Passive investing delivers better results - Even though it takes less time and costs less money in fees. And you can take part in it. Today, every individual can also invest in ETF funds copying the S&P 500 index or others. You can do this through your bank, your financial advisor or an online broker - there are many options.
What makes such investing great for women? After all, it fulfils the main idea of this article - it costs practically no time. At the same time, it is a relatively safe way of investing that suits women. For women, security and reliability are important - and saving time, too. Men often tend to play, fight, and win. And even in investing. They are tempted to play, discover new opportunities, fight to see if they invest better and earn more than someone else. Women invest more cautiously. And as you can see, it goes well even with a minimum of time.
So do not forget and do it like the Sleeping Beauty. Get started, set up the automation and forget you're investing. You will be pleasantly surprised at the end.
If you are interested in this kind of investing tips, if you speak Czech and want to learn more about how to get started and perhaps how to avoid various fraudulent offers that constantly appear in the world of investing, I invite you to my project on Instagram where I teach not only women to understand investing and use it for a better life.
Enjoy your life and let money work for you, even while sleeping.
