SALLIE'S OPINION

🔔 Reminder: You’re doing great

Hey, just checking in on how you’re holding up.

You’ve probably seen some less-than-ideal headlines about the markets in your news lately. They can make any investor feel a little … unsettled.

For those who need to hear it, I wanted to weigh in with a few gentle, every-so-often reminders.

First reminder: As I’ve said before: If you don’t control your own money, you don’t control your own life.

Second reminder: In a time when women’s progress has been limited (looking at you, persistent gender pay gap) or been reversed (glaring at you, reversal of women’s health care rights), building wealth is an obvious means for growing women’s power. Not to mention that reducing the gender wealth gap has been shown to improve just about everything it touches (communities, marriages, families, society). We know, without a doubt, that financial equality is essential to achieving real, sustainable gender equality.

Which brings me to my third reminder: There have only ever been a very limited number of ways for people-who-don’t-find-a-unicorn to build wealth. You’ve gotta get your money to earn money on your money, through the power of compounding. Which you can do by buying a home or investing. And of the two, investing is (much) more approachable, because investing doesn’t require a big down payment or a mortgage. And the returns have historically been higher.

That said, investing is not always smooth sailing, because there are no financial returns without risk. And last year wasn’t a great year for investing, with broader stock market measures down ~18-20%; last quarter was better, but the downfall of Silicon Valley Bank was pretty stressful. And First Republic was flirting with disaster before regulators stepped in this past weekend.

Of course, not all approaches to investing are equal. Finding an advisor, rather than going it alone, can be important. Last week, I rediscovered a classic Vanguard study that concludes that financial advisors can add 3 percentage points in annual returns vs the DIY approach. (Given that diversified investment portfolios tend to earn ~6% on average annually and the stock market ~9%, this 3% is meaningful.)

That value doesn't come from “stock picking” (though you wouldn’t know it from watching CNBC, with pundits declaring one stock overvalued and another one ready to buy). Instead, value is derived from things like rebalancing your investment portfolio, putting assets into the right vehicles (such as what goes into an IRA vs a non-retirement account), and — the biggie — what they call “behavioral coaching.”

What that looks like varies from advisor to advisor, and how they deliver advice. But behavioral coaching can result in guidance like “staying the course in tough markets,” “putting a recurring deposit in place,” or “not letting the highs or lows of investing influence your actions at all.” All things that will sound familiar to you at Ellevest.

And here’s a bonus reminder: Women investors outpace men, adding 0.5% to 1% in annual returns (depending on the study). That’s because women, more than men, tend to better “stay the course” and stay unruffled by the ups and downs of the markets.

Not my opinion; that’s just a research-backed fact.

So back to my first question: How are you holding up? For our Ellevest community, from where I sit, you’re doing pretty great.