[Cent #7] pov: you're looking to invest in the stock market

happy tuesday lil bees!! hope you’re all starting this week off with good vibes. For me, I’m grateful I got to recharge my battery this past weekend, being a loner in the sauna while also working on new & exciting things for between the buzz 👀🍯 

A little disclaimer before we continue: this content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. There's inherent risk involved with financial decisions and the website owner will not be held liable for decisions others make.

A few weeks ago, I wrote an article about how women are damn good investors. After releasing this, so many folks reached out to me around how they can get started. Thus, cent #7 of 25 cents on womanhood and money is more educational than others, providing some insights on two different perspectives to get started with investing in the stock market: hands-off and hands-on. I have a special guest today, so you won’t want to miss it 👯‍♀️ 

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Let’s baseline our knowledge. What is a marketable security?

Well, a security is a tradable, financial asset. Marketable securities are investments that can easily be bought, sold, or traded on public exchanges. Think stock, bond, exchange traded funds (ETFs).

Today, we’ll talk primarily about stocks & ETFs. In simplified terms, ETFs are a way to build your wealth, hands-off, in the stock market. But if you’re looking to have a more active hand, individual stocks are the way to go.

POV: building your wealth in the stock market, hands-off

The day I started my first full-time job, I was not immediately onboarding and reading docs for my new team. Rather, I was sitting excitedly with my dad to set up automatic investments from company payroll into Vanguard, a brokerage account.

I’d recently finished David Bach’s Automatic Millionaire and was inspired by the simplicity of compound interest to build my wealth, and best of all, with minimal touch point. Essentially, the idea is once you get paid, automatically route X% of your salary to investment accounts (i.e. Vanguard, Fidelity, etc.). So that before you pay your bills and extraneous expenses, you pay yourself first; specifically, your future self. Of course, there are suggestions on what X can be (i.e. 50/30/20 rule), but note, this is just a recommendation.

ETFs felt like the best way to go to get started. But what is an ETF? Essentially, it is a basket of stocks that is a diverse collection of securities can be bought and sold on an exchange throughout the day. They’re registered with the Securities Exchange Commission (SEC) to provide ongoing disclosures and information to investors.

What makes them different from stocks are ETFs can contain hundreds or even thousands of securities, which can help spread out risk exposure compared to owning a small number of individual stocks or bonds. Some are even targeted to a sector.

Two example ETFs are VOO, Vanguard’s S&P 500 Index tracking 500 of the largest U.S. companies, and VFH, Vanguard’s Financial Index tracking financial companies in the U.S. I personally found ETFs to be an easy, low-cost way to get involved with the stock market, especially as someone who had no prior experience evaluating companies.

But what about if you want to be more involved with the stock market?

POV: building your wealth in the stock market, hands-on

This is where one of my besties, Nut, comes in. As a woman trader powerhouse, I asked her to share her two cents on how to get involved in the stock market.

Why do you think women are not as involved in actively trading in the stock market as men?

People have this misconception that investing in the stock market makes them greedy, a bad person. But I strongly disagree, just because you invest in the stock market does not mean you are the next Bernie Madoff. You don’t have to steal money illegally to invest.

It’s actually a smart and sound way to secure your financial future while supporting businesses you like or know well.

It's so cool to hear from a woman who trades the stock market for a living. Can non-professionals get involved in the stock market as well?

Absolutely. We live in a time where trading is more accessible to the average American than ever before because of lower commission fees and a rise in trading platforms, like Charles Schwab, Fidelity, Vanguard, Robinhood, etc. To the common person, this gives you the power to learn about any business or industry that interests you. While Wall Street and quant funds do a lot of high frequency trading and quantitative analysis that make the stock market feel like a scary place, it’s actually quite easy to buy and hold stocks you feel comfortable with (whether that be Google, Eli Lilly, Ferrari, LVMH, or Abercrombie and Fitch).

Do you think everyone should buy and hold stocks?

Not necessarily! It takes just as much willpower / conviction in your ideas to buy and hold a stock for a very long time as it does to be an active trader who trades options - no one method is better than the other! Investing is a very personal thing and everyone should stick to the investing style that works best for them. There are many ways to reach financial independence. 

That being said, if you feel confident in your knowledge in a specific expert area and want to get involved in the markets, go for it! You don’t have to play it safe with the S&P 500 if you don’t want to, and you definitely don’t have to worry about those smart Wall Street hedge funds knowing everything better than you.

Can you give a 60 second pitch as to why women should get involved with trading? :)

Women are statistically proven to be better investors and a large part of that is because they tend to think about investing with more foresight and prudence. We tend to focus on what the next 10 years will look like (vs the next 10 months) and buy and hold investments that allow them to succeed over the long-term. So no, you are not too un-informed / young / womanly to get involved in the markets; in fact, you might just be better. 

For instance, if you are a fashion / shopping girlie and believed in the Abercrombie and Fitch story back in January 2021 when the brand really updated its style and bought $10,000 worth of stock then, you would have returned 662% over the last 3.5 years - leading to a whopping $76,200 portfolio (vs S&P 500 returning a meager 53% over the same time frame - leading to a $15,300 portfolio). You would have also beaten the returns of almost every hedge fund under the sun :)

Do you think it’s now easier for women to enter the finance world as a professional as well? 

Yes, I believe it’s no longer the same boys club it used to be or is demonized to be in popular media - women are starting to account for nearly 50% of entry level analyst classes at most investment banks. As more women enter positions of power, they are empowered with the ability to change the culture of Wall Street as we know it. We’ve actually had TWO $1bn+ hedge funds founded by women in recent years [1, 2]. 

What drove you to get involved in the stock market and what has been your experience on Wall Street?

As a woman of color personally involved in the stock market, it’s definitely not been an easy journey becoming comfortable being the only female investor in my NY office. But it has been so rewarding. I know I’m setting up my future generations for success. I know when we have a female intern in the office she feels 10x better knowing I’m there to help her pave the way. When I hear random groups of girls talk about recent earnings from X & Y companies or how the CEO is stepping down at Z company, it warms my heart and gives me the courage to keep going and represent my minority; for me, that’s enough.

One day you might be the role model for another young, brilliant woman who doesn’t know if she has what it takes to break into investing :)

What are some resources people can use to get more educated on the stock market and stay up to date on current market news?

Everyone has a unique investing style and thus benefits from different mediums of learning about current news. I think some great starting points on general macroeconomic news are newsletters like the Morning Brew. To learn more about investing in stocks specifically, I’d recommend:

• The Intelligent Investor by Ben Graham: covers all the fundamental principles of a good investor in excruciating detail

• Podcasts to learn more about cool companies / industries

  • Invest Like the Best

  • Business Breakdowns

  • The Art of Investing

As always, please let me know your thoughts / feedback / streams of consciousness at [email protected]. Specifically for this week:

If you enjoyed reading this, help me spread the word & share with your friends and family :)

until the next 🐝 , and with 💛 ,

Sneha