Disclaimer: I am not a CFA or any kind of finance professional. These are strictly my personal (not professional) opinions. Investing your money will always come with some sort of risk, but historically, the stock market has always bounced back even after major recessions.

Hi everyone! I originally posted this last night on FemaleLevelUpStrategy, but I wanted to post it here as well, because I really want as many women as possible to see this type of content. I think one of the most important concepts that is regularly referenced here on FDS is being financially independent, meaning, having our own money and investments and not relying on partners, parents, etc to be able to live. This is important for so many reasons, but probably the most relevant reason for us here at FDS is because one of the biggest reasons that women become stuck in abusive relationships (or just crappy relationships in general) is that we don’t have the financial resources to leave. I have learned so much from the other women on FDS, and it has motivated me to want to add helpful, empowering content to the sub as well. While our financial circumstances are all very different, I hope this post can teach everyone some basic concepts so that we can all at least get on the path towards financial independence from men.

Let me know if you have any questions, or suggestions for additions/edits to this post.

Budgeting

I would like to begin by saying - I understand everyone here is in wildly different financial circumstances, and maybe right now there is truly no way for you to carve out any money to save for yourself. If you are in that position, I recommend looking for a new job, a part time job on the side, or look into going back to school. (Especially right now, it seems a lot of places are desperate to hire people, so even if you are in a job like retail or food service, just by looking for a new job, you could probably get a pay increase.)

I recommend using the Mint app to get started with budgeting. The reason I recommend this app is because you can link your bank accounts/credit cards directly to the app, so you don’t have to manually log your purchases (I tried doing manual budgeting, and I always ended up forgetting things). Instead of enforcing a budget right away, you can link to Mint for a few months, and after a while you can take a look at your spending trends charts to see where your money is going. From there, you can see if you have any room to cut any spending out of your budget - maybe you spend more than you think you do on going out to eat, getting new clothes, Amazon purchases, etc. After you get a good idea of what you currently spend and areas where you can reduce, you can set your budget and track your spending throughout the month to try to stay in line with your budget.

Emergency Fund

Before you put any of your money into any kind of investment, you will want to build up a liquid emergency fund (meaning: cash in your account that is immediately available to you) that you keep either in your checking account or a savings account. For most people, an emergency fund should contain 3-6 months of expenses, depending on how stable your job/income is and your life circumstances. (For example, I have an extremely stable job, and have no children, so I could probably get away with a 3 month emergency fund. But, because I am risk averse, I have a 6 month emergency fund in my checking account.) This is another area where tracking your spending and having a budget will come in handy - because you will know exactly how much you spend in a month, you can be sure to have exactly 3-6 months of expenses on hand. If you are married or partnered, and you share finances, keep your emergency fund in a separate account where no one else besides you has access (I would recommend not telling your partner about it).

Investing

Investing is the topic everyone seems to be the most interested in, and it’s a HUGE topic - each heading below could be its own post (or series of posts). I encourage everyone to do their own research on these topics: Fidelity, Vanguard, Bogelheads, the FIRE subreddit, Investopedia, Nerd Wallet, etc all have good information.

Long Term vs Short Term Investing

It’s very trendy right now for people to day trade and make short term investments, but I strongly recommend against doing that. If you are looking to build long term financial stability, day trading is not a viable option, and is honestly more similar to gambling than it is to actual investing. Most studies show that over time, people simply do not beat average overall market returns. The type of investment strategy I will advocate for here is designed to get you in shape to retire comfortably, perhaps even early, and to have a nest egg of money in case you ever need it for a big emergency: divorce, death, disability, etc. For this reason, I recommend using tax-advantaged retirement accounts for investing.

Retirement Accounts

Retirement accounts are tax-advantaged accounts where you can invest money into the stock market. There are a few different types of retirement accounts, I will link an article below that breaks down the differences between them. Basically, all the money you contribute to a 401k or Traditional IRA will be taken out of your total taxable income for the year (that’s why they call it tax-advantaged). So, say you make $50,000 this year, but you contribute $5,000 to your 401k - your taxable income is now only $45,000. If your employer offers a 401k match, you should definitely be contributing enough to at least receive your employer match - it’s basically free money. This is also the easiest and most automated way to invest, so I recommend taking advantage of an employer offered 401k or 403b if you have one. If your employer doesn’t offer one, you can contribute to a traditional IRA, which has the same tax benefits. There is another type of IRA called a Roth IRA, where you can contribute post-tax money. The cool thing about Roth IRAs is that since you are contributing money that you have already paid taxes on, when you withdraw that money later, you won’t have to pay taxes on that income. The biggest drawback to retirement accounts is that if you withdraw from them before the age of 59.5, you will pay a 10% additional tax penalty for doing so. If you are interested in retiring earlier than that, there are a few different ways to access that money, but this is a beginner’s post, so I won’t go into those specifics here. (If you are interested in retiring early, I highly recommend checking out the financial independence subreddit. I am personally maxing both my 401k and Roth IRA, and I plan on retiring well before age 59!)

Brokerage Accounts

If you’re already maxing your retirement accounts, or you just don’t feel comfortable using a retirement account for now, you can open a brokerage account online, and start investing in individual company stocks, index funds, or bonds that way. I recommend Vanguard or Fidelity, as both are very user friendly, and both have low-expense index funds that you can easily invest in.

Individual Company Stocks vs Funds

Financial advisors portray the idea that investing in the stock market is too complicated for the average person, but it’s actually super easy once you break it down.

There are two major ways of investing in the stock market: you can purchase the stock of individual companies directly (so you can buy a share of Amazon, Apple etc) or you can purchase something called Index Funds/ETFs (Exchange Traded Funds). Index Funds are a way of purchasing multiple different companies all at once. So, for example, instead of buying a share of Amazon or Apple (or whatever company), you can buy a share of the Fidelity Total Market Index Fund (FSKAX). This fund holds over 3000 companies, and is designed to help you reap the gains of the overall stock market and minimize risk. The reason that index funds are less risky than buying individual company stock is because companies within the fund can fail or do poorly, but the success of the other companies in the fund will even out your risk. Instead of guessing at which companies you think may do well, your portfolio will increase at the rate of the overall stock market. Personally, I barely buy any individual company stock - currently less than 2% of my portfolio is in individual stocks. It’s just not necessary, and in my opinion, index funds are just easier and less risky.

If you’re interested in looking other index fund options, you can look into sector funds, which are indexes of different market sectors, such as technology, health care, energy, etc. I won’t go into those in detail here, because 1) this post is already too long, and 2) you don’t need to invest in sector funds to be a successful investor - plenty of people choose not to. I’ll just paste a link below so you can get a general idea of what they are.

The easiest and most pragmatic funds to invest in are total US stock market funds and total international stock market funds. On Fidelity, those tickers are FSKAX and FTIHX, and on Vanguard, those tickers are VTSAX and VGTSX (the first ticker listed for each is US market funds, and the second ticker listed for each is international market funds). These are by far the “safest” ways to invest in the stock market (note: all investments carry inherent risks, but historically, the market has always recovered after periods of recession).

When buying any type of funds, make sure you look for something called the Expense Ratio. This is the percentage that the fund manager takes as a fee - basically, companies put together these funds, and they take a % fee out of your assets. Opinions will vary widely on what a proper expense ratio is, but I would recommend sticking to funds with an expense ratio under 0.15%. (In fact, one of the biggest benefits of these total market funds is that their expense ratio is usually tiny.) For beginner investors, you’re probably not ready to try to judge whether or not a higher expense ratio may be justified (I personally own some funds with expense ratios higher than I’m advocating for here, and even I’m not sure if I’m making the right call - but the majority of the funds I hold are total market funds with tiny expense ratios.)

Bonds

Depending on your age and risk tolerance, you may want to also invest in bonds. Bonds are more “stable” - they don’t ebb and flow as much as the stock market does, so your returns won’t be as high, but they tend to blunt your losses in times of recession. You can purchase bonds through your retirement accounts or brokerage accounts; similar to stocks, I recommend buying bond funds/ETFs so you get a variety of different bonds. I’ve included a couple links below so you can get a better idea of the pros and cons of investing in bonds. If you’re not retiring for 20 years or more, you really don’t need to invest in bonds at all - but if you want a cushion against swings in the market, or you have a low risk tolerance, you may want to.

INVESTING ON EASY MODE: Vanguard Target Retirement Funds

If you’re looking at all of this, and it just looks like way too much work right now, but you know you need to start investing your money, I HIGHLY recommend opening a Vanguard brokerage or IRA account and buying Vanguard Target Retirement Funds. You literally just pick the year you estimate you’ll retire (dates further in the future are invested more “aggressively” - meaning they have a much lower % of bonds and a much higher % of stocks, dates closer to the present have a higher ratio of bonds), and purchase that fund. The fund is split between total market funds, total international market funds, and bond funds - so it’s literally just a combination of everything I’ve already discussed above. Incredibly easy, incredibly effective - you literally just buy one thing, and keep buying more, and you’re set. Link below for those list of funds:

https://institutional.vanguard.com/fund-list/?filters=trgDt,&sortBy=assetClass&viewType=quarterEndReturnsNAV

Cryptocurrency

Crypto is all the rage right now, and I want to start by saying: cryptocurrency is VERY risky. Many people choose not to invest in it at all, and you certainly don’t need to. I personally choose to invest in it because I kind of like the risk, haha, but I only have 10-20% of my portfolio in crypto (the total amount I have is constantly changing which is why I say 10-20% - one day I can log in and it can be half, or double, what it was the day, week, or month prior). If you’re interested in investing in Cryptocurrency, I will admit I don’t know a ton about the different platforms, but I use Coinbase Pro. If you want to use Coinbase, DO NOT USE REGULAR COINBASE - use Coinbase Pro. Regular Coinbase is prettier and has better graphs, but they will kill you with fees. Coinbase Pro isn’t as great of an interface, but the fees are much lower - 0.5% per trade. If you don’t want to do a ton of research into different cryptocurrencies (there are literally thousands of them), but you want to hold the main ones, I recommend buying Ethereum (ETH) and Bitcoin (BTC) (personally I mostly hold Ethereum). Just like with my index funds, I don’t trade, I buy and hold (but of course if it skyrocketed like 10x overnight, I might sell off some profits, haha). I’ll paste some links below that explain a little more about cryptocurrency. You’ll see references in some of the articles below to digital wallets, storage of cryptocurrency, etc. One of the reasons I use Coinbase Pro is because it is a reputable place to buy/sell crypto - other exchanges are not so reputable/stable, so you can’t keep your money on the exchange, it has to go into a digital wallet. I do not invest this way, and I don’t recommend investing this way unless you are willing to do a ton of research on it - there are definitely benefits to doing it this way, like access to a wider variety of cryptocurrencies, and lower fees - but it does require much more research and effort, and I’m too lazy for all that.

Real Estate

Investing in real estate is advanced, and in my opinion, not the place to start for investing beginners. However, I do think it would be interesting to eventually discuss more advanced financial topics on FemaleLevelUpStrategy (or here? depending on demand), so if any of you queens have invested in real estate and have a playbook/advice - please make a post!!

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Retirement accounts: what is a 401k and IRA?

https://www.investopedia.com/ask/answers/12/401k.asp

What are index funds?

https://www.investopedia.com/investing-in-index-funds-4771002

What are sector funds?

https://www.investopedia.com/terms/s/sectorfund.asp

How much to invest in stocks vs bonds?

https://www.thebalance.com/how-much-of-my-money-should-be-in-stocks-vs-bonds-2388518

Basics about investing in bonds

https://www.nerdwallet.com/article/investing/investing-in-bonds

Bond ETFs

https://www.investopedia.com/terms/b/bond-etf.asp

Cryptocurrency basics and overview of crypto brokers

https://www.nerdwallet.com/article/investing/cryptocurrency-7-things-to-know

https://investorjunkie.com/alternative-investments/investing-in-cryptocurrency/

How to invest in cryptocurrency

https://www.forbes.com/advisor/investing/how-to-buy-cryptocurrency/