Key Takeaways
1. Invest for your future self: Start early and make it a priority
"There were times I felt like I'd never be able to get ahead. But I did. Slowly but surely, I changed my mindset and habits through learning and by understanding what my money was being spent on and where I could save."
Compound interest is powerful. By investing early and consistently, you can harness the power of compound interest to grow your wealth significantly over time. Even small, regular contributions can lead to substantial gains in the long run. For example, investing $500 each month from age 21 to 60, with an average return of 7.5%, could result in a portfolio worth $1.25 million.
Overcome financial obstacles. Many people struggle with debt, low income, or poor financial habits early in life. However, it's crucial to recognize that these challenges can be overcome through education, discipline, and a shift in mindset. By prioritizing saving and investing, even in small amounts, you can build a foundation for future financial success.
- Start investing as early as possible
- Make regular contributions, no matter how small
- Focus on long-term growth rather than short-term gains
- Educate yourself about personal finance and investing
2. Understand your money mindset and risk tolerance
"When you live in harmony with your values, everything becomes easier. Aligning your money mindset with your values helps foster pride in your accomplishments."
Identify your money story. Your attitudes and beliefs about money, often formed in childhood, can significantly impact your financial decisions. Take time to reflect on your money story and how it influences your approach to investing. Understanding these underlying beliefs can help you make more conscious and aligned financial choices.
Assess your risk tolerance. Every investor has a unique risk profile based on their personality, financial situation, and goals. It's essential to honestly evaluate how much risk you're comfortable taking with your investments. This will help you choose appropriate investment strategies and avoid making emotional decisions during market fluctuations.
- Reflect on your childhood experiences with money
- Identify any limiting beliefs about wealth and success
- Take a risk tolerance quiz to determine your investor profile
- Align your investment choices with your risk tolerance and values
3. Build a solid financial foundation before investing
"Paying off debt is an investment in itself."
Establish an emergency fund. Before diving into investing, it's crucial to have a financial safety net. Aim to save 3-6 months of living expenses in an easily accessible account. This will protect you from having to sell investments at a loss in case of unexpected expenses or income loss.
Tackle high-interest debt. Prioritize paying off high-interest debts, such as credit card balances, before investing heavily. The interest saved by paying off these debts often outweighs potential investment returns. Once you've addressed high-interest debt, you can focus on building wealth through investing.
- Save 3-6 months of living expenses in an emergency fund
- Pay off high-interest debt aggressively
- Create a budget to track income and expenses
- Ensure you have adequate insurance coverage
4. Diversify your investments across different asset classes
"Diversification is key, and it's important to also know that when we diversify, we aren't only doing it to manage risk (although sometimes it feels that way!). When we diversify, we can actually reap greater rewards from our portfolios."
Spread risk across asset classes. Diversification involves investing in a mix of assets, such as stocks, bonds, real estate, and cash. This strategy helps minimize risk by ensuring that poor performance in one area is offset by better performance in others. A well-diversified portfolio is more likely to provide stable returns over time.
Consider geographic diversification. In addition to diversifying across asset classes, consider investing in different geographic regions. This can help protect your portfolio from country-specific economic or political risks and provide exposure to growth opportunities in various markets.
- Invest in a mix of stocks, bonds, and other asset classes
- Consider both domestic and international investments
- Use ETFs or mutual funds for easy diversification
- Regularly rebalance your portfolio to maintain desired asset allocation
5. Choose between active and passive investing strategies
"Dollar cost averaging is a strategy where you get to be a little bit less active, because you trust the market to do its thing."
Active investing. This approach involves actively selecting individual stocks or other investments in an attempt to outperform the market. It requires more time, knowledge, and often higher fees. While it can potentially lead to higher returns, it also carries more risk and may underperform the market.
Passive investing. This strategy involves investing in index funds or ETFs that track broad market indices. It's based on the belief that it's difficult to consistently outperform the market, so it's better to match market returns at a lower cost. Passive investing typically involves lower fees and less ongoing management.
- Active investing pros: Potential for higher returns, more control
- Active investing cons: Higher fees, more time-consuming, higher risk
- Passive investing pros: Lower fees, less time-intensive, broad market exposure
- Passive investing cons: Limited potential to outperform the market
6. Consider ethical and ESG investing for long-term sustainability
"I genuinely believe that we are all heading towards a place where we will expect ethical companies and ESG companies to be the norm. Imagine how great that would be."
Align investments with values. Ethical investing allows you to support companies that align with your personal values and beliefs. This can include avoiding industries you disagree with (negative screening) or actively investing in companies making positive impacts (positive screening).
ESG factors in investing. Environmental, Social, and Governance (ESG) investing considers a company's impact on the environment, its social responsibility, and its governance practices. Research suggests that companies with strong ESG practices may outperform their peers in the long run.
- Define your ethical investing criteria
- Research companies' ESG practices and ratings
- Consider ESG-focused ETFs or mutual funds
- Stay informed about evolving ESG standards and regulations
7. Maximize your superannuation for retirement security
"Super is the government's way of saying it's up to you to create your own secure financial future."
Understand superannuation basics. Superannuation is a tax-advantaged retirement savings system in Australia. It's crucial to understand how it works, including contribution limits, investment options, and access rules. Maximizing your super contributions can significantly boost your retirement savings.
Choose the right super fund. Not all super funds are created equal. Compare funds based on fees, investment options, insurance offerings, and performance. Consider whether you want a balanced, growth, or high-growth investment strategy within your super fund, based on your age and risk tolerance.
- Make voluntary contributions to boost your super balance
- Consider salary sacrifice to reduce your taxable income
- Review and adjust your super investment strategy regularly
- Consolidate multiple super accounts to reduce fees
8. Learn to read financial statements and company reports
"An annual report is the main big document that a company uses to communicate details of its activities, financial results and strategies to shareholders and other stakeholders."
Understand key financial documents. Familiarize yourself with balance sheets, income statements, and cash flow statements. These documents provide crucial information about a company's financial health and performance. Learning to interpret these statements can help you make more informed investment decisions.
Analyze financial ratios. Key ratios like price-to-earnings (P/E), debt-to-equity, and return on equity (ROE) can provide insights into a company's valuation, financial stability, and profitability. Compare these ratios to industry averages and the company's historical performance to gauge its relative strength.
- Read annual reports and quarterly earnings releases
- Pay attention to management's discussion and analysis sections
- Look for trends in revenue, profit margins, and debt levels
- Consider both quantitative data and qualitative factors (e.g., competitive position, industry trends)
9. Develop a personal investment plan aligned with your goals
"Everyone wants to make money out of their investments, of course. We're here to build some wealth! But let's stop and really think for a minute: what is your overall, big-picture goal with investing?"
Define clear financial goals. Start by identifying your short-term, medium-term, and long-term financial objectives. These could include saving for a house deposit, funding your children's education, or building a retirement nest egg. Having specific, measurable goals will help guide your investment decisions.
Create a tailored investment strategy. Based on your goals, risk tolerance, and time horizon, develop a personalized investment plan. This should include your target asset allocation, investment vehicles (e.g., stocks, ETFs, mutual funds), and a regular contribution schedule. Be prepared to adjust your plan as your circumstances change over time.
- Use the SOTM framework: Specific, Optimistic, Time-bound, Measurable
- Consider your current financial situation (earn, spend, own, owe)
- Choose an investment strategy that aligns with your risk profile
- Regularly review and rebalance your portfolio
10. Stay informed about tax implications of investing
"I think tax is really sexy. By the end of this chapter, I hope you agree with me – and feel more comfortable about managing the process for your investments."
Understand capital gains tax. When you sell an investment for a profit, you may be liable for capital gains tax (CGT). In Australia, assets held for more than 12 months are eligible for a 50% CGT discount for individuals. Be aware of how CGT applies to different types of investments and plan accordingly.
Maximize tax-efficient investing. Take advantage of tax-advantaged investment vehicles like superannuation and consider strategies like tax-loss harvesting to optimize your after-tax returns. Keep accurate records of all your investment transactions to simplify tax reporting.
- Keep track of purchase dates and costs for CGT calculations
- Consider the timing of investment sales to manage tax liabilities
- Understand how different types of investment income are taxed (e.g., dividends, interest, capital gains)
- Consult with a tax professional for personalized advice
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FAQ
1. What is Investing with She’s on the Money by Victoria Devine about?
- Comprehensive investing guide: The book is a detailed, accessible guide to investing, tailored primarily for millennials and women, covering shares, property, superannuation, ethical investing, tax, and more.
- Empowerment and education: Victoria Devine aims to empower readers to take control of their financial futures through clear explanations, practical activities, and relatable stories.
- Focus on values and gender: The book addresses gender inequality in finance, encourages aligning investments with personal values, and helps readers build confidence regardless of their starting point.
- Holistic approach: It explores both the technical and psychological aspects of investing, including money mindset and personal goal setting.
2. Why should I read Investing with She’s on the Money by Victoria Devine?
- Bridges financial knowledge gaps: The book demystifies investing, making it approachable for beginners and especially for women who may feel excluded from traditional finance spaces.
- Practical and motivational: Victoria shares her own journey and client stories, offering actionable steps and mindset shifts to inspire readers to take charge of their money.
- Addresses unique challenges for women: It tackles issues like the gender pay gap, superannuation disparities, and psychological barriers, providing tailored advice to help close these gaps.
- Relatable and jargon-free: The language is clear and accessible, breaking down complex concepts into understandable advice.
3. What are the key takeaways from Investing with She’s on the Money by Victoria Devine?
- Investing is for everyone: The book emphasizes that anyone can learn to invest, regardless of background or starting point, and that small steps can lead to significant wealth over time.
- Values-driven investing: Aligning investments with personal values and long-term goals is central to building sustainable wealth and financial confidence.
- Education and mindset matter: Understanding your money mindset and risk profile is foundational to making informed investment decisions.
- Practical tools and strategies: The book provides step-by-step frameworks, real-life examples, and actionable advice for budgeting, debt management, and building an investment plan.
4. How does Victoria Devine define and address money mindset in Investing with She’s on the Money?
- Money mindset explained: Your money mindset is shaped by beliefs and feelings about money, often rooted in childhood and family experiences, and it influences all financial decisions.
- Nine money personalities: The book outlines nine investor types (e.g., High Rollers, Optimists, Perfectionists) to help readers identify their attitudes and tailor strategies accordingly.
- Reframing and self-belief: Victoria encourages reframing negative thoughts (e.g., “budget” to “spending plan”) and aligning financial decisions with personal values to foster motivation.
- Foundation for investing: Understanding and improving your money mindset is presented as a crucial first step before making any investment decisions.
5. What foundational financial steps does Victoria Devine recommend before investing?
- Know your financial position: List all income, expenses, assets, and liabilities to gain clarity on your starting point.
- Budgeting and emergency fund: Create a realistic budget and build an emergency fund covering at least three months of essential expenses to protect against unexpected events.
- Debt management first: Prioritize paying off high-interest debt, as repaying debt offers a guaranteed return equal to the interest saved.
- Preparation for investing: These steps ensure you have a solid foundation and are not forced to sell investments in a crisis.
6. How does Investing with She’s on the Money by Victoria Devine explain risk and its role in investing?
- Risk is personal and unavoidable: Everyone has a different risk tolerance, and even doing nothing with your money is a risk due to inflation and lost opportunities.
- Types of investment risks: The book covers risks like market timing, inflation, currency fluctuations, and volatility, and warns against panic selling or following hype.
- Superannuation and risk: Victoria advises reviewing your super fund’s investment options and fees to ensure they match your risk profile and values.
- Understanding risk profile: Knowing your risk tolerance helps you choose suitable investments and avoid emotional decision-making.
7. What types of investments and asset classes are covered in Investing with She’s on the Money?
- Main asset classes: The book explains cash, property, bonds, and shares, detailing their characteristics, risks, and potential returns.
- Shares in detail: It distinguishes between ordinary and preferred shares, growth vs. dividend shares, and blue chip stocks.
- Funds and ETFs: Victoria covers exchange traded funds (ETFs), index funds, and managed funds as ways to diversify and invest passively.
- Liquidity and volatility: The book discusses how easily assets can be bought or sold and how their values may fluctuate.
8. How does Victoria Devine approach investing in shares in Investing with She’s on the Money?
- Purpose of shares: Shares allow companies to raise capital, and investors gain ownership and potential profits through capital growth and dividends.
- Active vs. passive investing: Active investing involves hands-on management to outperform the market, while passive investing tracks indices for steady, long-term growth.
- Micro-investing and robo-advice: The book encourages starting small with micro-investing platforms and explains robo-advisers as automated tools for investment decisions.
- Research and objectivity: Victoria stresses the importance of reading company reports and understanding financial statements before investing directly.
9. What insights does Investing with She’s on the Money by Victoria Devine provide about property investing?
- Property as home vs. investment: The book distinguishes between buying a home to live in and buying property as an investment, each with different goals and risks.
- Costs and risks explained: It details upfront costs (deposit, stamp duty, mortgage insurance), ongoing expenses, and the importance of understanding market cycles.
- Personalized strategies: Options like rentvesting, buying with friends, or commercial property are discussed, with advice to seek professional guidance.
- Yield vs. capital growth: Victoria explains the difference between earning income from rent (yield) and making money from property value increases (capital growth).
10. How does Victoria Devine define and guide ethical and ESG investing in Investing with She’s on the Money?
- Ethical investing is personal: There’s no universal definition; it depends on your individual values and beliefs about what’s right or wrong.
- ESG vs. ethical investing: ESG (Environmental, Social, Governance) focuses on company practices, while ethical investing overlays personal values on these criteria.
- No sacrifice on returns: The book cites studies showing ethical funds can outperform traditional funds, debunking the myth that values-based investing means lower returns.
- Beware of greenwashing: Victoria warns that some companies may falsely claim to be ethical, so investors should research carefully and use tools like RIAA’s Responsible Returns.
11. What investment strategies and frameworks does Victoria Devine recommend in Investing with She’s on the Money?
- Four main strategies: The book outlines value investing, growth investing, dividend investing, and dollar cost averaging as core approaches.
- Core-satellite approach: Victoria suggests combining a core passive strategy (like dollar cost averaging) with smaller active investments to balance risk and engagement.
- Align with goals and risk: Choosing a strategy depends on your personal goals, risk tolerance, and life stage, with regular review and adjustment recommended.
- Eight-step investment plan: The book provides a step-by-step process for creating, implementing, and reviewing a personal investment plan.
12. What tax considerations and common mistakes does Victoria Devine highlight in Investing with She’s on the Money?
- Capital gains tax (CGT): Profits from selling investments are taxable, but holding assets for over 12 months qualifies for a 50% CGT discount.
- Negative and positive gearing: The book explains the tax implications of investment income versus expenses, and how both can affect your tax bill.
- Record-keeping is crucial: Accurate documentation of all transactions, income, and expenses is essential for tax reporting and maximizing deductions.
- Common mistakes: Victoria warns against ignoring tax obligations, selling too quickly, poor record-keeping, and lack of diversification, all of which can undermine investment success.
Review Summary
Investing with She's on the Money receives mixed reviews. Many readers find it helpful as an introduction to investing, praising its accessible language and empowering approach for women. However, some criticize it for being repetitive, lacking depth, and not providing enough practical guidance. The book is particularly valued by beginners but may be less useful for those with more financial knowledge. Readers appreciate the Australian focus and the author's friendly tone, although some find the writing style overly casual. Overall, it's seen as a good starting point for financial literacy.
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