March 2, 2022

27-year-old who turned $500 into $60,000: How to invest if ‘you’re scared of losing money’

[Acorns, Tori Dunlap]

Only 28% of women feel confident about investing some of their money, according to a recent study from BNY Investment Management. One reason women don’t invest more, according to the survey, is because they see it as too much of a gamble: A whopping 45% of women respondents said that investing money in the stock market — either directly or in a fund — is too risky.

Tori Dunlap, founder of Her First 100K, is trying to dispel that myth. She achieved her goal of saving $100,000 before her 25th birthday and now coaches women on budgeting and how to grow their wealth by investing. Her company recently launched a community board called Treasury where members can join discussion boards and chat about how to manage investments.

When she was 21, Dunlap started her Roth IRA with $500. Six years later, between her Roth IRA and Traditional IRA she holds more than $60,000, thanks to her own contributions and market gains.

She wasn’t always confident in her investing abilities: “I remember logging into Scottrade [now TD Ameritrade] and just feeling immediately overwhelmed and not knowing what any of these things meant.” Dunlap and her dad looked up the definitions of different terms and what stocks they should invest in. “It may as well as been written in German,” she says.

Now, one of the goals of her company is to coach women out of their investing anxiety. For many of her clients, she says, they just feel like they don’t know enough and it’s “too complicated.” That doesn’t need to be the case.

“Analysis paralysis is costing you a ton of money,” she says. “If you’re scared of losing money, buy and hold.”

This is especially true because time is a huge factor when it comes to investing. The sooner you start investing, the more years you have for compound interest to potentially work in your favor and help you grow your wealth. “Even it’s just $50 or $100 a month [you can invest], time is more important than the amount of money,” she says.

Here are three of her top tips for feeling more comfortable investing and some lower-risk ways to get started.

Talk to your friends

After a quick consultation on how to invest, many of Dunlap’s clients say to her, “Oh, it’s just that easy?”

That’s why it’s important to talk about investing with your friends, she says. “We are socially conditioned not to talk about money,” she says. “Go, ‘Hey, I’ve been thinking about opening up a Roth IRA.’ Say, ‘I have a 401(k) through my work. Do you have one?’ Start having conversations like that.”

Discussions like this can be educational and give you the confidence you need to start.

Talk to your company

Along with talking to your friends, talk to your company about what investments they will match.

“If you have a workplace retirement program, especially if you have a match program, your company will give you double your money,” she says. “Please take advantage of that. If you don’t know if you have one, ask.”

Try index funds

One of the less risky ways to invest, Dunlap says, is to own index funds. Index funds are a type of investment that tracks the performance of a particular market benchmark. If you own an S&P 500 index fund, for example, you own a diversified portfolio which follows the performance of the 500 largest U.S. companies.

Index funds are the most common type of investment option to select from in many 401(k) plans or with automated investment services like robo-advisors.

We are socially conditioned not to talk about money.

Tori Dunlap

Generally, “index funds are stable over time,” says Dunlap. “Consistent, long-term investing is done over a period of decades. Not weeks, not months, not even a year.”

Famed investor Warren Buffett is also a fan of index funds. “In my view, for most people, the best thing to do is to own the S&P 500 index fund,” which would track the S&P 500, he said at one of his company’s virtual annual meetings in 2020.

Remember, Dunlap says, if a stock seems too good to be true it probably is. Instead of following hype stocks, concentrate on making long-term investments.

“Investing shouldn’t be sexy, it should be stable,” she says. “You don’t need a lot of money to get started. Time is more important than the amount of money.”

By Aditi Shrikant

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