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Published on 01.10.2021 | By Caitlin Chiam
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‘Women in Commerce and Politics’ was graced with the wisdom of Sim Kaur from ‘Girls That Invest’, a non-profit organisation that is dedicated to providing young women with the skills to make empowering financial decisions. With over 60k followers on instagram and 100k podcast downloads, they are spreading their financial wisdom far and wide.
From ETFs to IPOs to NFTs to the ASX - investing can be full of daunting and off-putting economic jargon. That’s why Sim and Sonya simplify the stock market, and tools we need to prosper within it, through casual conversation and colloquial terms. Money can often be a taboo topic, but ‘Girls That Invest’ want to normalise it. Learning about money and gaining financial literacy will equip us with the skills we need to obtain economic independence. Sim certainly provided us with the knowledge we need to make our own informed investment decisions!
Here are some of the things we covered in this ‘Investing 101’ masterclass:
We unpacked the reasons why people choose to invest, broke down what the stock market is and how it works, dispelled misconceptions about investing, discussed different investing strategies and finally, what ethical investing is and how to get involved.
Stock market:
There are many reasons that people choose to invest whether it be to beat inflation, reap the benefits of compound interest, reach a life goal or achieve financial independence. Whereas money locked in the bank loses its value by about 2% each year, money invested in the stock market has the potential to grow in value.
Busting misconceptions about investing:
Sim unpacked some investing myths. Investing is not just for the rich! She encouraged people to invest even a small amount in fractional shares and watch the wealth grow. Investing is also not just for men in suits that we may see standing in front of graphs on the TV. Investing can be for anyone. Further, investing is not comparable to gambling. The risk of investing can be minimised by research allowing informed decisions.
Investing styles:
We learned about the benefits of passive investing as opposed to active investing. Passive investing involves buying safer index funds or ETFs that track a group of stocks on your behalf and keeping these investments long-term. Active investing involves doing a lot of research, being reactive to changes in the market and meticulously curating your own investment portfolio. Active investing is much more effort than passive investing and studies show that the majority of active investing underperforms or matches passive investing. Sim also explained the benefits of diversifying your investments so that you can absorb individual downturns in stocks and industries within your investment portfolio. This means opting for index funds and ETFs rather than individual companies.
A key theme of the masterclass can be summed up by the saying, investing is about time in the market not timing the market. Although there are peaks and troughs in the stock market, it is still profitable to hold onto these stocks for a longer period of time and ride the waves of the stock market rather than pulling out of the market and consolidating your losses. Profits reward time in the market so it is worth getting in early! In the long term, investing early is more profitable than investing large sums of money for a short term result.
What is ethical investing?
Ethical investing is factoring in moral judgements to your investment decisions. For example, this could mean boycotting companies that are not fair trade or choosing to invest in companies with female CEOs. The term was coined in 2010 by an Australian Oncologist named Dr Bronwyn King who created a not-for-profit organisation called ‘Tobacco Free Portfolios’ with the goal of eliminating the tobacco industry from investment portfolios around the world. Traditionally, this has been seen as an ineffective investing technique, however a 2020 Morningstar report found that a majority of ethical funds match or beat the market!
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If you want more of ‘Girls That Invest’, here is how to stay involved!
Instagram: @girlsthatinvest
Facebook group: Girlsthatinvest
Podcast: Girls That Invest
Email: hello@girlsthatinvest.com