Let me start by saying that I have been married for 15 years. I would want my wife to read this quick guide to investing if something should happen to me. I hope I do not offend anyone or offer up any gender stereotypes, as that is not my intention.
For the most part, there is a difference between how women and men value money for the future. If I had to put words to it, I would say that women like the security aspect of money. Men like the freedom aspect of money.
Sometimes these views can conflict with one another. For example, given $10,000, a woman may want to save this money in a high-yield savings account or a certificate of deposit. A man may want to put it all on a hot investment tip that he heard about at work.
Prepare for Inflation
As a man, I am constantly seeking the worst-case scenario or asking, “what’s the over-under?” I understand that of all my investments; a couple may lose money or tank. But I value the big picture of my portfolio growing over time.
My wife has a different view. She always wants to make sure that we are debt-free—this helps her sleep well at night. In fact, everyone has different opinions on money. The book “Smart Couples Finish Rich” has some good exercises to assist couples in getting on the same page as far as retirement, investing, and wealth-building. I highly recommend this book to all couples.
Today, I specifically want to focus on the financial mindset of investing for women. I will review some of the particulars later, but I want to help you build trust in the stock market. When I ask most people about investing, most people (guys and gals) say something to the effect of “doesn’t everyone lose money on the stock market?”
It is essential to understand that most people invest for capital gains. I invest for income; I invest for dividends (book). Capital Gains vs. Dividends is a hotly debated topic for the ages, but investing for dividends is “the long game.”
When people invest for capital gains, they are attempting to get rich from the stock market. I do not believe the stock market will make you rich. The stock market is not a wealth generator—the best wealth generators are real estate and business. Wealth is having excess income vs. expenses.
Why Do I Need to Invest in the Stock Market?
What we want to do is create a wealth generator first. Then, with the excess cash flow, invest in the stock market. Now, we are making a good amount of wealth, and the stock market is helping us keep that wealth growing. The book “The Millionaire Fastlane” calls this funding your money system.
So before you invest tons of money into the stock market, understand the big picture. You want to find something to increase your income, lower expenses, and use the excess cash flow to fund your investment account. For example, if you begin renting rooms. That extra cash could go directly to your money system (investment account).
Hopefully, this helps you sleep better at night. I know many people who don’t want to lose their hard-earned money in the stock market. I can honestly understand that. So we need to increase our cash flow with business or real estate. Investing will be the tip of the iceberg.
Diversify Your Passive Income
However, as we create our wealth generator, we can still take a little money and invest it. The intent would be for us to begin to feel comfortable with the stock market. My goal for you is to be able to invest $100 into dividend-paying stocks and index funds by the time you finish this book. You don’t need a lot of money to start investing.
The Basics of Dividend Investing. Dividend investing is actually pretty simple once you learn what companies, stocks, and ETFs to invest in. You don’t have to keep checking your stocks or worry about when to sell.
Dividend investing is like buying a rental property and holding it while you collect the rent. Over time, the rent will make you rich, and the house should grow in value. That is akin to dividend investing in a nutshell.
Receiving dividends every month is a fantastic feeling and hard to describe. My wife and I have amassed a $180,000 dividend portfolio and are growing it every month. Our goal is to have a $1 million portfolio five years from now.
A quick side story. I have been investing in my wife’s dividend accounts for the last year. For her fourth brokerage account, I asked her to open a Cash App account. I helped her decide what dividend stocks to invest into this account.
Achieve Work-Life Balance 2
One day she asked me something kind of funny. She said, “My Cash App keeps having money in the account. I haven’t transferred any money there, but there is always a few dollars in the account. It keeps growing.” I said, “Babe, those are your dividends.”
That is when she truly understood the magic of dividends. Now, she is becoming as obsessed as I am with the process of dividend investing. In fact, we started a $1,000 dividend spending spree challenge in time for Black Friday.
Three parts of a dividend portfolio. Okay, this is my take on dividend investing. You can scour the internet and create your own way. When you look at all nine of our dividend brokerage accounts (five for me, four for my wife), they are all built this way. The three parts of my dividend portfolios are index funds, blue-chip stocks, and high-yield products.
Index funds. Index funds are the growth element of our dividend portfolio. When I look at my dividend portfolio, I want to achieve 4% capital appreciation (growth) and 4% dividend yield (income). I plan to live off the income and let the other money continue to grow. Index funds will increase the portfolio while we collect the dividends.
How Much Do You Need for Retirement?
Blue Chip Stocks. Blue Chip stocks are the biggest companies in America. Some examples are McDonald’s, Starbucks, Target, etc. There is no right or wrong answer to the blue-chip stocks that you invest in. Blue Chips stocks give us good growth and good dividends. Over time, the compound returns can make you very wealthy. So we definitely want to buy into some solid companies over time.
High-Yield products. This is where the fun comes in. High-Yield products (book) give most of their returns through income, meaning they have little growth but huge dividends. In a perfect world, you could live from only the high-yield element of your portfolio. High-yield products include REITs, closed-end funds, and preferred shares.
Building your portfolio. So you have your $100, and it’s time to invest. In How to Start Dividend Investing 103 (book), I recommended either the Cash App or Stash to begin investing. I use both of these, and I love the simplicity. Once you get more advanced, you can branch-off into more complex products.
For my wife’s Cash App, here is what we did. (This is not investment advice, just exactly what we started her account with.) I believe we started her account with $2,000. We just split it five ways.
- Index fund is Total Stock Market (VTI) amount was $400
- Blue Chip that pays in January- Altria (MO) amount was $400
- Blue Chip that pays in February- AT&T (T) amount was $400
- Blue Chip that pays in March- Prudential (PRU) amount was $400
- High-Yield Product pays monthly- AGNC (AGNC) a REIT amount was $400
So we tried to hit all the wickets. We have a growth element, blue chips that pay across all the different months, and a high yield monthly payer. This is the basis of a long-term dividend portfolio. You can add more index funds, blue chips, and high-yield. It is really up to you.
Conclusion. I hope you leave with the main takeaway that you will need to learn to trust the market. The stock market is not for wealth creation; it keeps and grows the wealth you have.
I love dividend investing, but my wife and I have three rental properties and military retirement. Those are our wealth generators. With that excess income, we invest most, if not all, of it into the stock market. When the dividends hit our accounts, that is our discretionary income.
How to Invest During a Downturn
I see more and more single mothers or women serving as the head of the household. They must think long-term. As a provider, I am already thinking about how to provide for my grandkids. I am only 40 years old, but I am investing with them in mind already.
The hardest part is just that initial trust in the market. Understand that we have all felt that way before. However, it is something that you must overcome. Trust me; I remember when I released my first blog post, I was so nervous. Now, I have books all over the place.
I have been documenting my weekly dividend portfolio growth for my Cash App. You can see all 49 weeks here on Pinterest. I started with $170, and it is now $22,000. You can see how the market fluctuates, but in the end, it goes up slowly.
Remember, the stock market is for keeping the wealth you have already built. Find a wealth generator in business or real estate. Start small and learn to trust the market and enjoy dividends. You will be okay. Good Luck and Happy Investing.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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