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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn how women can excel at investing, overcome financial challenges, and build wealth with practical strategies.

What does it mean to invest like a girl? How can women start investing and overcome financial challenges? Hosts Sean Pyles and Kim Palmer discuss gender differences in investing and practical strategies for women to build wealth. Kim interviews Jessica Spangler, author of Invest Like a Girl: Jump into the Stock Market, Reach Your Money Goals and Build Wealth, about the ways women tend to excel at investing, including taking time to make investment decisions, avoiding rash choices during market downturns, and focusing on long-term goals. They discuss strategies for eliminating high-interest debt, creating a budget that works for your lifestyle, and choosing the right mix of stocks and bonds for personal goals.

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Sean Pyles:

Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.

Kim Palmer:

And I’m Kim Palmer.

Sean Pyles:

On Smart Money, we are all about answering your money questions, and today we’re tackling an intriguing one. What does it mean to invest like a girl? Investing might seem like a topic that needn’t be gendered, but it turns out there are some gender differences, and that’s part of what we’ll dive into today. Kim, in her role as the host of our regular book club series, is here to guide the conversation. So Kim, who are you talking with?

Kim Palmer:

I’ll be talking with Jessica Spangler. She’s the author of Invest Like a Girl: Jump into the Stock Market, Reach Your Money Goals and Build Wealth. Jess is also a popular money educator on Instagram and she has a lot of ideas to share on women, investing and personal finance.

Sean Pyles:

Sounds great. Well, we also want to remind listeners that you can enter for a chance to win our book giveaway at nerdwallet.com/bookclub for our next book club pick. And with that, Kim, I’ll let you take things from here.

Kim Palmer:

Great, thank you. Jess, welcome to our show.

Jessica Spangler:

I’m so happy to be here. Thanks for having me.

Kim Palmer:

Let’s start with what really feels like the most awkward question. Why do women need their own investing book? I mean, don’t we all have the same basic rules that apply to us all?

Jessica Spangler:

Absolutely. The title of this book is intentionally ironic, right? Invest Like a Girl. What does that mean? Well, it’s really twofold. First of all, when you walk into any big box store, you’re pretty much bound to find ballpoint pens for women or razors for women or even laxatives for women. Really, there’s nothing fundamentally different about these products. They function just the same for people of all genders. There are differences about investing when it comes to women, even though the fundamentals of investing are the same for everyone.

For example, women are more likely to be the primary caretakers in the home, whether that’s taking career breaks or stepping down to part-time to help raise children or even to take care of our aging parents. On top of that, we are more likely to live longer. And so we have longer periods of retirement and higher health care costs as we age. Those factors compound together to equate to lost savings over time. This investing gap needs to be made up so that we can fund these factors that really differentiate us in retirement.

One might think then, the second half of the irony of the title, Invest Like a Girl, there’s similar sayings, hit like a girl, punch like a girl. Well, the thing about investing actually is that women are very good at it. When you look at the data, Fidelity did an unbelievable, wonderful study called the Women in Investing Study that actually showed that women, while we often hesitate to start investing and while our numbers are growing, we hesitate to get started. But actually, when we do, we wind up earning higher returns on average than men.

Kim Palmer:

That is so fascinating to me and that really jumped out at me from your book. What explains that?

Jessica Spangler:

There are some differences that were noted in the study. In particular, women were more likely to take their time when making investing decisions. In fact, the stereotype that women are probably going to be more emotional investors and might be more likely to make rash decisions, well, in fact, it’s quite the opposite. We actually do more research. We are less likely to make split-second decisions. We’re less likely to sell in a market downturn that is likely just a temporary fluctuation. And we’re more likely to have long-term goals and plans that we see to and stick through even when times get tumultuous.

Kim Palmer:

Given the importance of investing for women for all the reasons you just laid out, how can women get started with investing and make it a little bit easier?

Jessica Spangler:

This book, Invest Like a Girl, it’s really designed to be a guideline that will walk you through step-by-step exactly how to get started investing, and it’s really divided into two parts. The first half is really laying the framework for all of the investing lingo, breaking down all of the background information that you need to know about stocks and bonds and index funds and really getting into the finer details about informed decision-making so that when you get to the second half of the book, you have a whole bunch of sample investment portfolios laid out for you so that you can find one that seems to align the most with your goals, and then you can sort of tweak and tinker with those portfolio samples so that they’re really customized to you using all of the information that you learned in the first half of the book.

Kim Palmer:

You’re also a big advocate of the idea that you don’t have to have a trust fund or a lot of money to get started. Do you have to have a certain amount? I mean, when should you get started?

Jessica Spangler:

There is no denying that people that grow up with money absolutely have a leg up. There’s no denying it. But those people are already going to be investing. They’re already going to be utilizing these age-old tools that they’ve known about for generations, whether we do it or not. No matter how much money you have or what background you come from, there is real power in getting some skin in the game.

And you don’t have to have any amount of money, really. Nowadays, you can start with as little as a dollar to purchase fractional shares of a stock. I think that’s a really common misconception about this barrier of entry. Of course, I want to acknowledge that there is very real wealth inequality and there are people who absolutely have a leg up, but it is possible to improve your financial footing no matter where your starting point is with any amount of money using the tools that are in this book.

Kim Palmer:

Do you think that it’s important, just to take a step back, at someone’s overall personal finances? If you also have a lot of high-interest credit card debt, for example, or you don’t yet have an emergency savings fund, should you focus on that first before you think about investing, or do you suggest kind of just doing everything all at once?

Jessica Spangler:

There’s a great section in the first half of this book called Out of Debt and Into the Game. One of the things that we talk about is differentiating between high-interest debt and low-interest debt. When we think about high-interest debt, these are essentially interest rates that are going to exceed the average returns that you can expect in the stock market. And so, when we have really high-interest debt like credit card debt that can be much higher than 7%, going all the way up into 20%, 30% interest rates, it’s going to be really hard to benefit from investing when that interest rate on the debt is going to be taking two steps back every time you take one step forward.

We do talk about the strategies to eliminating high-interest debt in this book, because that really is important before you get started with investing. And of course, like you said, having an emergency fund is absolutely essential so that you’re not digging into your savings when life throws curveballs at us, as it always does.

Important to say that I do think often we feel as if we need to have no debt at all in order to start investing. This idea of you can’t have any student loans whatsoever, you’ve got to pay off your mortgage, that’s just not the case. If we can optimize our debt so that we are eliminating high-interest debt and still maintaining things that hopefully have a lower interest rate, something like federal student loans, whereas we may pay off our private ones if those have higher interest rates, we can really optimize our personal finances so that we can still benefit from the great wonderful compound interest of investing.

Kim Palmer:

Let’s dive into some of your other specific strategies. I know there’s a lot to unpack, but a few things that jumped out at me that maybe you could give us an overview of. You talk about how important it is to figure out your net worth and think about your cash flow. Could you just help us understand what that means exactly?

Jessica Spangler:

The gist of it is that your net worth is really everything that you own minus everything that you owe. It’s really just a snapshot. It’s a picture in time of what your assets are looking like versus what your liabilities are looking like. It really says nothing about necessarily the future of your financial standing or how successful or not you may be at investing. It’s really just a snapshot of where you’re at right now, how much money do you have in assets that you own, and how much money are you spending on liabilities or debt. We just calculate net worth by subtracting your outstanding debt and the money that you owe from your assets and the money that you own.

Assets may be cash. That’s an easy one. It could also be the value of your home if you own a home. It could be valuables, jewelry, furniture, things that have value, things that you could sell for cash. Whereas liabilities, the money that you owe, often we’re talking about loans here, the value of your student loans, the value of the mortgage on your home. If you have the value of credit card debt, you would subtract that number from your assets to get your net worth, and that’ll give you just a snapshot in time of where you are in terms of what you owe versus what you own.

Kim Palmer:

Perfect. And then you can work on growing that.

Jessica Spangler:

Exactly. It’s important to know where you’re at so that you can figure out where you’re going.

Kim Palmer:

And with the cash flow idea, is that basically you’re trying to get a handle on your budget just to understand your money going in and out before you start making any investing decisions?

Jessica Spangler:

Exactly. I think budgets can be really boring and dry and bland kind of conversation for a lot of people, and it’s something that even I just naturally feel kind of averse to because oftentimes it feels so strict and so stringent that it’s just really hard to find something that fluctuates with daily life as it does. But having a good budget means taking a look at all of your money, where it’s coming in, where it’s going, so that you can make room for things that you value. I think that’s really what differentiates a good budget from just an Excel spreadsheet that isn’t really doing anything for you.

A good budget helps you see what is going on with your money so that you can prioritize spending it on things that you love, whether that’s vacations or time with your family or investing. It’s being able to have an idea of the full clear picture so that way you can set aside that extra money for investing.

Kim Palmer:

And then when you are ready to turn to investing, you talk about picking the right mix of stocks and bonds and other investing vehicles. And obviously the best choices are going to vary so much by person. Can you give us an overview of how someone makes those choices for themselves?

Jessica Spangler:

Like you said, it really is such a personal decision. There are a lot of factors that go into why someone may lean more stock-heavy in their portfolio versus bond-heavy in their portfolio. Generally, we’re thinking about a couple different things. First of all is your risk tolerance. This is how much you can deal with fluctuations in the market.

Stock market crashes are normal. It’s a normal part of the market cycle. Even just normal fluctuations in the market, it’s very normal. Some people are totally comfortable with those fluctuations, and they don’t mind seeing their portfolio drop by 30% one year and be up by 30% the next. That person would be more likely to choose a stock-heavy portfolio where equities can fluctuate more rapidly on a regular basis.

A person who wants less risk in their portfolio, that person may be more likely to purchase something like bonds, where the value is less likely to fluctuate, and as long as you purchase government bonds, you are going to get what you put in at the end plus interest. Those ratios in your portfolio can change accordingly.

The other part of the equation is time horizon. How long you have before you need to access the money can really greatly impact what kinds of decisions you decide to make. For example, if you’re relatively young, you have 30-plus years before retirement, you may be very comfortable investing more heavily into stocks and equities because you have 30 years between now and the time that you have to actually think about withdrawing some of that money in retirement. So whatever kind of roller coaster the stock market takes you on in between now and then is really inconsequential so long as 30 years from now you actually net positive. Whereas somebody who’s retiring in the next couple of years and has built up this really solid nest egg, they might be a lot more cautious when investing 80% or 90% of their money into stocks and equities because when their retirement party is 50-something weeks away, they’re going to want to make sure that their money isn’t fluctuating heavily right before they get to retire and sit on a beach somewhere and enjoy the fruits of their labor.

There’s lots of other things to think about, but those are two of the main factors when it comes to selecting your ratio of equities and bonds and all the other different types of securities that we talk about in the book.

Sean Pyles:

More of Kim’s conversation with Jessica Spangler is coming up in a moment. Stay with us.

Kim Palmer:

A lot of people are also concerned about the social and environmental impact of the companies they’re investing in. Is that a good thing to consider? And if you do want to think about that, what’s the best way to evaluate it?

Jessica Spangler:

That is definitely something that we talk about in the book. Environmentally sustainable investing is a topic of growing importance and growing conversation. And more and more data is really coming out about it. It’s often hard to know what a company is reporting in terms of their financials and how that actually holds up on the back end with what they’re doing to be sustainable. There are some markers that we can look for when it comes to more equitable and sustainable investing, whether or not the companies are really transparent in their reporting process, whether that’s emissions or how they are having their products tested and rated for environmental grading groups.

In the book, you’ll read about various certifications that companies can go through to do that. There’s also the topic of diversity and equity and inclusion in the actual upper ranks of the company and whether or not they’re following through in some of their mission statements to include various groups into the higher levels of the executive company. But that said, and we talk about this in the book as well, it’s important to also look out for greenwashing or this concept of appearing to be particularly sustainable or equitable by using terms that don’t really have a clear definition, terms that make a product perhaps seem as if it may be sustainable when in fact it’s not.

I always encourage investors who are interested in sustainable and equitable investing to look into some of the documents and the literature that each individual company will post as part of their annual report and their reporting documents to the SEC, and those are mentioned in more detail in the book, but it really does require a pretty substantial amount of research to really determine whether or not a company is following through on their promises.

Kim Palmer:

Can you share some of the lessons you’ve learned yourself as an investor? Have you personally changed your strategy at all or made mistakes along the way?

Jessica Spangler:

I think that one of the biggest things that I’ve learned is that more complex is not necessarily better. And what I mean by that is I think there’s this tendency, the more you learn about investing and the more you learn about personal finance, to feel like you have to do these increasingly complicated investing maneuvers like, “Okay, I’ve got to have 4% this and 6% this and 12% that, and I should probably incorporate a little bit of this,” when frankly, most of the data suggests that those of us who invest primarily in a well-diversified balanced index fund that represents either the total stock market or the S&P 500, so the top 500 companies in the United States, we typically statistically outperform some of these major professional hedge fund managers who spend all of their time and money manipulating all of these different ratios and portfolios to find the perfect investment. Really keeping it simple can actually be more profitable, and that’s definitely something that I’ve learned over the years.

Kim Palmer:

In the book, you also say a lot of choices around investing really circle back to what your goals are. What are some examples of a short-term goal and a long-term goal that maybe investing could help us achieve?

Jessica Spangler:

When we think about financial goals, I tend to separate them into three different categories: short-term goals, medium-term goals, and long-term goals. Now, when I think about a short-term goal, I’m talking about one to two years, generally. And for a very short-term goal, like maybe you’re saving for a down payment on a house and a high-yield savings account, that might not be something you actually even want to invest for at all. If a goal is so short that it’s right around the corner and you really want to have that money flexible and available to you, a high-yield savings account might be the perfect place to put that money so that you still have access to it in cash, but you’re getting a higher interest rate than you would in a standard run-of-the-mill savings account.

Now a medium-term goal, which now we’re thinking between three to seven or maybe even as far out as 10 years in the future, this might be something that you’re saving for in the long-term. Maybe you are investing to make a major payment on a loan that you already have. Maybe you are looking to invest in some other property. Maybe you’re looking to invest for retirement or for a really great wonderful vacation or a backpacking trip or something that’s still three to seven years down the road. Once we start to think in that kind of time horizon, that’s when we start to focus a little bit more on investing.

Of course, for longer time horizons—10, 15, 20, 30 years out—that is when investing really shines because the longer your money is able to stay in the market, the longer you are able to take advantage of compound interest and really watch your money grow. It’s a lot harder to say that you will certainly make money in the stock market in a one to two year span when fluctuations are almost certain than it is to say that you’ll make substantial profit three to seven to 10 to 30 years out in the future where you have plenty of time to accumulate that nest egg and really work towards more far-out financial goals.

Kim Palmer:

If you do have money invested, it can be so stressful if there’s a news day where suddenly the stock market is just plunging. Putting it in the context of the fact that some of these goals are long-term, do you recommend we pay attention to these daily swings?

Jessica Spangler:

Personally, absolutely not. I mean, that’s just so stressful. And for what? If your long-term goals are far enough out in the future that it’s really not something you need to pay attention to, the only thing that really matters is that 20 years from now, 30 years from now, whatever that longer-term time horizon is for you, the only thing that matters is that in the future you walk away with more money than you put in today and not less. What happens on the day-to-day is just noise, and there’s really no reason to get caught up in it. If you’ve got your long-term vision in mind and you’ve got your goal at the end, you don’t need to get caught up in all of the market mumbo jumbo.

Kim Palmer:

For anyone listening who’s wondering why it’s so important to learn how to invest and create financial security for yourself, you share a really powerful story at the beginning of the book about your family and what you experienced growing up, what really inspired you to take control of your finances. Do you mind sharing that story here?

Jessica Spangler:

Absolutely. I grew up in a middle-class family. My dad worked in construction as a carpenter and my mom was a stay-at-home mom. When I was seven years old, my dad passed away very suddenly from a heart attack, and nobody saw it coming. He was this tall, manual labor job, slender dude. It was totally out of left field, and it was a life-defining moment for me and for my mom. We lost my dad, which was obviously emotionally devastating on its own, but we also lost our only source of income. And neither of my parents went to college. My mom didn’t have a degree where she could just go out and pick up a good-paying job. She really had to figure it out for herself and for her kids. And as women do when they’re faced with any trying situation, she just got it together. She pulled through. She took some classes and started working in real estate, and went on to become this amazing award-winning realtor. She is my biggest inspiration.

But through this whole time, I really learned by osmosis. I went to listing appointments with her. I went to settlements. I walked through open houses. And as fate would have it, in 2008, the housing market wound up crashing. And once again, we really lost our sense of financial stability. It taught me at a really young age, I don’t want to rely on anyone for money. I want to have my own source of income. I want to be able to provide for myself financially and I want to have a sense of control and choice and power in my own financial life.

Neither of my parents went to college, so of course my first instinct in all of this was that of course, I should go to college. I should go all the way and get a doctorate, which is what I wound up doing. But it wasn’t until so many years later when I learned that my paycheck was enough to survive. It was enough to live. And for that, I’m grateful, so grateful because absolutely not everyone can say that. But it wasn’t really enough to retire. It wasn’t enough to really set away a nest egg and to make sure that I was comfortable forever.

What I really had to start thinking about was investing. How do I actually provide for myself so that I never need to rely on anyone, not now or not in the future? I taught myself to invest. I learned everything I could online about investing and got started doing it myself. And here we are all these years later, writing a book and trying to help in some way so that other women feel empowered and feel that they have agency in their own financial future so that they have the choice to leave a job that doesn’t fulfill them or leave a relationship that isn’t safe or just retire on a beach somewhere. Whatever it is that your goal is, it’s possible to have financial independence and it’s something that I spent my whole life looking to achieve, and here we are.

Kim Palmer:

Thank you so much for sharing that. It is definitely so inspiring. Do you have any closing thoughts to share with our listeners?

Jessica Spangler:

I am a huge proponent of women having the agency and the ability to make their own choices in any capacity. And being financially independent, being financially educated gives you that choice. It gives you access, it gives you agency, and it gives you real independence. I just want women to know that if there’s any doubt that they can’t, they absolutely can. There is an entire book of data and numbers and strategies and step-by-step guidance that will show you that you are more than capable. You are great at it.

Kim Palmer:

I love that. Jessica Spangler, thank you so much for joining us on Smart Money.

Jessica Spangler:

Thank you so much for having me.

Kim Palmer:

Yes, that is all we have for this episode. To share your thoughts on money, shoot us an email at [email protected]. This episode was produced by Sean Pyles and myself. Tess Vigeland helped with editing. Megan Maurer mixed our audio. And a big thank you to NerdWallet’s editors for all their help.

Sean Pyles:

Visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate and review us wherever you’re getting this podcast. You can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Kim Palmer: