The Girl Math Guide To Investing

You don’t need a finance boyfriend, a six-figure salary, or an opinion on crypto. You need to understand what your money could be doing while you’re busy enjoying life. The wealthy make money work for them. A quick note: This article is for education and isn’t financial advice. My hope is that it helps you understand investing, feel more confident asking questions, and figure out what to learn next. Investing involves risk, including losing money. This article includes referral links; Evie may receive rewards when readers sign up and meet the offer requirements. Offers are subject to eligibility, expiration, and each platform’s terms. You can calculate the cost per wear of a $300 dress before the sales associate finishes asking if you need a fitting room. You know which credit card has your Sephora offer. You have strong feelings about paying $19 for a cocktail that is mostly ice. You are capable of understanding investing. Somewhere along the way, though, we decided that buying things was a feminine interest and owning things was a masculine one. Women could discuss the bag . The men would discuss the company that sold it. Let’s expand the conversation. Investing in your 20s doesn’t require becoming the girl who brings up the stock market at brunch. It means giving some of the money you earn a chance to grow before you need it. And the most useful thing you have right now might be the thing you rarely think of as an asset: time. When I was poor in my early 20s living near Beverly Hills, I would sigh and wonder how all these people could happily enjoy such nice dinners. They were laughing and enjoying company while I was struggling to put gas in my car. How did they do it? I had to find out. The Girl Math That Actually Makes You Money Here’s a calculation worth knowing: when an investment earns a return, those earnings can stay invested and potentially earn returns of their own. That’s compounding . Say you invest $1,000 and it grows by 8%. You now have $1,080. If it grows another 8% the following year, you earn $86.40, because the return applies to the larger balance. The first year, your money earned money. The next year, some of that money earned money too. Think of it like a snowball. Now give that process a few decades, keep contributing, and the numbers become much more interesting. You are capable of understanding investing. For illustration, imagine investing $200 a month until age 65, with an assumed 8% annual return: Age 25: contribute $96,000, About $644,000 at 65 Age 35: contribute $72,000, About $282,000 at 65 Starting 10 years earlier means contributing an additional $24,000. In this example, it produces roughly $362,000 more at retirement. That is a much better argument for starting now than any man yelling “buy the dip” on a podcast. These are hypothetical calculations, not forecasts. They assume end-of-month contributions and a constant 8% effective annual return, compounded monthly, before taxes, fees, and inflation. Real returns vary, investments can lose value, and future dollars will buy less than today’s dollars. This is based on the average. Meet The S&P 500 Buying an individual stock means buying a small ownership stake in one company. An S&P 500 index fund spreads your investment across roughly 500 large American companies by tracking an index called the S&P 500 . Think of it as buying a basket rather than guessing one winner. That matters because even companies you love can make disappointing investments. A packed store, a viral product, and your personal loyalty do not tell you whether a stock is reasonably priced. An S&P 500 index fund is one accessible way to invest in a broad slice of the U.S. stock market. It isn’t a savings account, and it isn’t the entire investing universe. It concentrates on large U.S. companies, with more weight given to the biggest ones. Other funds cover smaller businesses, international markets, or bonds. And about that 8% figure: you do not collect a guaranteed 8% every year. The market can have excellent years, awful years, and long stretches that test your patience. Historical averages also change depending on the period measured, whether dividends are reinvested, and whether inflation is included. Use 8% as an example for understanding compounding, not a promise for planning next year’s vacation. But getting a share of the 500 winners is a good thing. Before You Buy Anything, Give Your Money A Job Your rent money should not be having an adventurous week in the stock market. Keep an emergency cushion in accessible savings. Think of it as a tax on yourself, but eventually you’ll be able to earn much more. Money you’ll need soon, whether for moving, tuition, or a wedding, generally belongs somewhere more stable than stock investments. Expensive credit card debt also deserves attention. Paying down a balance charging 25% interest avoids a very real cost. You don’t need to have your entire life financially perfected before learning to invest. You do need to distinguish money you can leave alone from money you may need on Tuesday. Whether it’s $100 a month, $1,000 a month, $10 a week. Whatever. Just try to be consistent. Boring Can Be Very Attractive When comparing funds, look at what they own, the risks, and their ongoing fees. A fund’s “expense ratio” is its annual operating cost expressed as a percentage of your investment. At a 0.03% expense ratio, that’s about $3 a year per $10,000 invested. At 1%, it’s about $100. Other costs may apply, but the point is simple: fees leave less money invested for you. If choosing several funds feels overwhelming, a low-cost target-date retirement fund may be worth understanding. These generally combine different investments and adjust their mix over time toward a retirement year. They still carry risk, and their fees and approaches vary. You don’t get extra credit for making your portfolio complicated. Okay, But What Do I Actually Download? You do not need five investing apps. You need one you understand and a plan you can afford to keep following. Betterment: For The Girl Who Wants Someone Else To Handle The Portfolio If choosing investments is the thing keeping you from starting, look into Betterment . Its automated investing service recommends a portfolio based on information such as your goals, timeline, and comfort with risk, then manages it for you. Your first move: complete the questionnaire honestly, review the recommended portfolio and fees, and choose an automatic contribution that fits your budget. You are paying for management and convenience. That does not guarantee better returns or protect you from losses. Also, an automated portfolio is not necessarily an S&P 500 fund; it may include several types of investments. You are paying for management and convenience. I’ve been using Betterment for investing and savings. My Betterment referral offer advertises $150 invested for you, plus a 0.75 percentage-point APY boost on eligible cash for three months, when you meet the offer requirements. We both get rewarded. Read the linked terms for qualifying deposits, eligible accounts, deadlines, and other conditions; signing up alone may not qualify you. Robinhood: For The Girl Who Wants To Choose Her Own Fund Robinhood is an option for self-directed investing. If you want to understand exactly what you’re buying and choose it yourself, this is a different route from handing portfolio management to a robo-adviser. Your first move: learn the difference between the account and the investment, then research a broad, low-cost ETF. If you specifically want to study S&P 500 funds, examples include Vanguard’s VOO and iShares’ IVV . They track the same index, so buying both adds little diversification. Check the fund’s holdings, expense ratio, share or fractional-share requirements, and whether recurring purchases are supported. Confirm the actual investment purchase after funding your account. And please keep the beginner plan simple. Options, margin borrowing, and a cryptocurrency you heard about at dinner are separate decisions with additional risks. They are not required to build an investing habit. I find it the easiest app and very aesthetically pleasing. Are you on Robinhood? If not, sign up with my link to claim a stock reward! Disclosure: This is our referral link, and we may receive a reward if you sign up and meet the offer requirements. Your eligibility and reward are subject to Robinhood’s current terms. Stash: For The Girl Who Likes Guidance While She Learns Stash is another app to compare if you want investing tools with an emphasis on beginner education and guidance. Review which investing features come with the plan you’re considering, and whether you would choose investments yourself or use a managed option. Your first move: read the subscription terms before choosing the cute interface. A small monthly charge can be a big percentage of a small account. For example, a hypothetical $3 monthly subscription costs $36 a year. On a $100 balance, that equals 36% of your starting balance, before investment gains or losses. That is a fee illustration, not a quote of Stash’s current pricing. I’ve been using Stash to invest, too. My Stash referral offer advertises three months with subscription fees waived when you join and deposit at least $50. Additional fees may apply. Check the linked terms and claim before the offer expires. Review the regular subscription price and what happens after the promotional period before enrolling. Your First-Payday Plan Once you have an emergency cushion, a plan for expensive debt, and money you can leave invested for years: Choose one platform and the account appropriate for your goal. For retirement, compare your workplace plan and IRA eligibility before defaulting to a taxable account. Complete the identity checks and link your bank. Read the fees and choose either a managed portfolio or investments you understand. Start with a sustainable amount, whether that is $25, $50, or $100. Set up recurring contributions and, where available, recurring investment purchases. Verify that your money is invested rather than sitting in cash. Downloading the app takes a few minutes. Building the habit is the part that can change your finances. Automate It And Go Have A Life Choose an amount your budget can support. Maybe that’s $25 a month. Maybe it’s $200. A sustainable amount is more useful than an impressive one you’ll need to withdraw next month. I typically invest in VOO, which is the Vanguard S&P 500 index fund on Robinhood. Where your account allows it, automate both the transfer and the investment purchase. Increase the amount when your income rises or your expenses fall. Put money in and forget about it. Then resist treating the balance like an Instagram story you need to check every four hours. Review your investments periodically, but remember what the money is for and how long you expect to leave it invested. Put money in and forget about it. The goal is a plan you can live with through ordinary life and unpleasant headlines. You Can Like Beautiful Things And Build Wealth You don’t have to renounce every pleasure to become someone who invests. You can love clothes, book the trip, buy dinner with your friends, and still give your future some space in the budget. But a purchase you enjoyed and an investment expected to produce a financial return do different jobs. Calling everything an investment makes it harder to see where your money actually goes. You deserve things that make your life lovely now. You also deserve options later: the ability to change jobs, leave a bad situation, or retire with more independence. Start with an amount you can afford. Learn what you own. Let consistency do some of the work. Future you has excellent taste. She’ll appreciate having choices. This article provides general financial education, not individualized investment advice.