Inside-Out Investing: Part One

Imagine your future self 20 or 30 years from now, living your ideal life. What would it be like? What would you be doing? What would be bringing you satisfaction and joy? These thoughts are more than just daydreams. What you manifest for your future usually has a lot to do with what you invest in today—both figuratively and literally.

This will be a two-part blog series designed to help you discover what motivates you, what matters to you, and which financial actions you could take to help you realize the life you want. Today’s post will focus on finding your “why you invest (or should be investing)”, acknowledging where you’re at in your journey and then breaking down some myths.

The Benefits of Meaning

Whether you’re just starting to think about investing or you’ve been investing for years, the inside-out approach can help you look at your investments (and the reasons behind them) in a whole new way—potentially making them feel more meaningful and more tied to your life.

Combined with smart investing habits and professional support, completing an inside-out plan could help you experience both financial and emotional benefits. For one thing, basing investments on internal, values-related goals—rather than arbitrary, external factors—may deliver better results. In one study, using a goals-based framework in financial planning led to a wealth increase of more than 15%.¹

As for emotional benefits, aligning your investments with what’s meaningful to you could help produce feelings of:

• Satisfaction by making progress toward what you want
• Motivation by setting goals and planning to reach them
• Resilience by knowing that a long-term plan can likely withstand short-term volatility
• Accomplishment by taking an important step toward your future
• Confidence by knowing your portfolio is tied to your life

It Starts With Your Heart

Investing from the inside out starts with the heart, with your deepest values and most cherished aspirations. It starts with why you want to save and what you want to accomplish with your money. And it includes understanding at least some of what fuels your current approach to money and investing.

Understanding the “why” beneath your desire to invest and the challenges and myths that could be holding you back will help free you to create a genuine, empowered plan for your financial future.

What Is Your Why?

Start to identify your personal investing why by asking yourself questions about money and what you’d most like to do with it or feel because of it. If you keep asking, you’ll eventually end up with an answer that expresses the why that underlies your investing motivation. Typical investing whys usually sound something like:

• To feel confident about my future
• To have a positive impact on causes and people I care about
• To gain success and respect
• To feel happiness and joy
• To have an exciting and excellent adventure

Embrace Where You’re At

Women are earning, inheriting, and controlling more wealth than ever. And especially among Boomers and Gen Xers, the trend is likely to grow. By 2030, women could control much of the $30 trillion now held by Baby Boomers.² But it’s also true that women as a group face greater financial challenges than men and have less savings than men.^3,4,5,6 Do any of the following financial challenges ring true for you?

• I’ve left and re-entered the workforce one or more times (to raise children or care for a parent, for example).
• I suspect or know that I’ve been paid less than a man in a similar position at some point in my career.
• I prefer keeping money in a savings account or certificate of deposit over investing in the markets.

If you answered “Yes” to any of these statements, you might have some savings catch-up to do.

Trade Myths for Truths

Another reason women tend to have less savings than men is that women are less likely to invest at all. Why? Possibly in part from misconceptions about investing. For example, which of these investing beliefs might you hold?

• I think it takes a lot of money to invest.
• I think I don’t know enough to invest.
• I think investing is risky and savings are safe.
• I think investing is out of my control.

All of these statements are false, but if they feel true to you, your beliefs about investing could be holding you back. Here’s the truth:

• Investing even small amounts can help you build wealth over time.
• You don’t need to be an expert in investing. You just need to follow a few fundamental principles. Working with a financial advisor can help as well.
• Many women focus on the risks in investing. But especially for women trying to catch up with retirement savings, not investing can be more risky—because cash can actually lose value over time as the cost of living increases.
• The markets are out of everyone’s control, but there are plenty of things about investing that you can control.

Harness Your Advantages

Several characteristics tend to distinguish women from men as investors. As a group, women are more likely to:

• Invest long-term instead of moving money around
• Diversify rather than concentrate on favored stocks
• Invest based on facts, not gut feelings
• Trade less often, possibly resulting in lower fees⁷

These are all helpful tendencies. But they can’t help as much if you aren’t investing—or you aren’t investing enough. Investing from the inside out can build confidence and enthusiasm in investing by tying into your values, your goals, and your life.

Putting It Together

Hopefully these probing questions have provided some food for thought and you’re starting to find your WHY, embrace where you’re at, scrub those myths out of your mind and feel confident as a female investor. In part two of this blog series we will outline the process for linking your personal purpose and values to your life goals and investments – stay tuned!

If you would like to speak with an advisor about your future, how to achieve goals but don’t know where to start or want to ask investing questions in a judgement-free open conversation, book a complimentary call with us today.

Sources: Schwab Asset Management
¹ Morningstar. “Behavioral Nudges for Goals-Based Financial Planning,” Dec. 12, 2018.
² McKinsey & Co. “Women as the next wave of growth in US wealth management,” July 29, 2020.
³ Population Reference Bureau. “Older Women Live Longer, But With More Disability and Financial Challenges Than Men,” May 29, 2019.
⁴ U.S. Trust. “2017 U.S. Trust Insights on Wealth and Worth,” 2017.
⁵ Waggoner, J. “The Financial Impact of Divorce After 50,” AARP, Feb. 14, 2020.
⁶ Kapadia, R. “Women’s Retirement Savings Are Way Behind Men’s. Here’s Why That Gender Gap Persists,” Barron’s, Nov. 18, 2019.
⁷ Boston Consulting Group. “Managing the Next Decade of Women’s Wealth” (pp. 7–9), April 2020.
M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. This blog has been provided solely for informational purposes and does not represent investment advice or provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy. Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.