What Does it mean to invest like a woman?

The concept of investing like a woman sound almost insulting at first, as though women are somehow incapable of investing the traditional way. Yet a new investment platform designed to tailor investments to the differences in women’s careers and lifetime earnings.

Ellevest is a New York-based digital investment platform built specifically for women. The massive popularity of Ellevest stems from its ability to generate customized investment portfolios that are tailored to women’s specific goals and timelines.

The three-year-old investing platform has just raised $US34.6 million in a new round of funding led by venture capital fund Rethink Impact. Ellevest had previously raised $US9 million in September 2016 from investors, including Aspect Ventures and Venus Williams.

“Two-thirds of wealth in this country is going to be controlled by women by 2030.” Jenny Abramson, the founder and managing partner of Rethink Impact (@rethinkimpact).

The platform takes into account the gender pay gap women endure, along with factoring in that women tend to live longer. Women’s salaries tend to peak earlier than men’s and grow at different rates than men’s, resulting in a big difference in the amount of savings each gender has at retirement age.

The Difference In Investing for Women

Ellevest co-founder and CEO Sallie Krawcheck is a former Wall Street executive at Morgan Stanley and Citibank who realized that the vast majority of the investing industry has been traditionally run by men, for men, which historically kept many women from achieving their financial goals.

In an effort to help close the gender savings gap and provide women with an opportunity to take control of their financial futures, Krawcheck created the digital investing platform, Ellevest.

As females tend to have a lower financial risk tolerance than men, the investments they choose are often less extreme.  A recent report by BlackRock reveals that only 28% of women would be willing to take a high risk in exchange for the potential to receive a good return on an investment, as compared to 45% of men.

Women tend to be less concerned about beating the market and focus more on ensuring their money isn’t going to disappear. Many women may also shy away from the idea of investing, as they believe their salaries are already committed to paying for other financial obligations.

That’s where Ellevest really stands out from the competition. There is no minimum investment amount needed in order to get started, but members have the opportunity to invest in a range of low-cost ETFs that are tailored to each user’s individual preferences using a goals-based approach.

Traditional investment advisors advocate depositing a lump sum of cash in order to begin investing. By comparison, Ellevest encourages women to begin with whatever they can afford, as even small amounts of money have the capacity to contribute towards achieving future financial goals.

Krawcheck recognizes that the power of compounding plays a pivotal role in building wealth over the long term. Compound interest allows any interest already earned to then accrue interest on itself. Over a period of time, even a small amount of money invested early has the power to earn more than a larger lump sum of money invested later.

While there are some women-only investing groups and coaching opportunities available to help females learn the intricacies of investing, Ellevest remains the only investment portfolio management app designed to cater only to women.

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