Yahoo Finance 7 Ways for Women To Build Long-Term Wealth That Very Few Are Taking Advantage Of
While there are numerous ways for women to build long-term wealth, not many are taking advantage of these proven methods, according to a recent GOBankingRates survey.
The data, which included over 1,000 American women, asked respondents to name the actions they were taking to build long-term wealth. They answered as follows:
Investing in a brokerage account: 19.08%
Saving in a retirement account (401(k), IRA, etc.): 34.97%
Creating passive income streams: 20.58%
Investing in real estate as a rental property: 6.59%
None of the above: 44.06%
The percentage of women who aren’t taking advantage of the above methods is startling. But, as experts emphasize — it doesn’t have to stay that way. Awareness is key.
Read: 6 Reasons the Poor Stay Poor and Middle Class Doesn’t Become Wealthy
More: 4 Genius Things All Wealthy People Do With Their Money
“The challenges for women building wealth start with confidence,” said Jennifer P. Kirby, fiduciary financial advisor and managing partner of Talisman Wealth Advisors.
“We see a lot of women sitting on an abundance of cash,” she noted. “While some cash is important for emergencies,” Kirby added, “I think the overweight to cash has to do with a lack of confidence in themselves to make good investment decisions.”
According to her, this is based on traditional gender roles and societal norms. “It’s important for women to try to put that aside and know that they are just as good at money as men.”
She added: “But there are no shortcuts, and factors such as persistent wage disparities and less access to capital make it even more imperative to start with the more traditional investment vehicles, not hoard too much cash and don’t over speculate.”
Below are some expert-backed ways women can use to begin building long-term wealth today.
1. Investing in a Brokerage Account
“I’ve personally navigated and leveraged several strategies to build long-term wealth, and I’m passionate about encouraging more women to take advantage of these opportunities,” said Tanya Vanterpool, Realtor at Macken Realty.
“My journey into the stock market began with setting up a brokerage account and slowly diversifying my investments into stocks, bonds and mutual funds,” she explained.
“This approach has not only broadened my investment portfolio but also enhanced my understanding of market dynamics, which is crucial for making informed investment decisions.”
Garrett Ham, CEO of Weekender Management, Inc. and adjunct professor at the University of Arkansas, explains how this can work to women’s advantage.
“I teach as an adjunct professor where I discuss the impacts of compound interest and the importance of early, diverse investments in a brokerage account.”
“Women, often underrepresented in investment discourses, can significantly benefit from harnessing the power of compound interest by starting to invest early in a diversified portfolio that includes stocks, bonds and ETFs.”
He says this not only broadens their financial base but also cushions against market volatility.
Explore: 5 Ways To Become a Millionaire in Your 50s
2. Saving in a Retirement Account
“Understanding the importance of retirement savings, I have consistently maximized contributions to my 401(k) and IRA,” said Vanterpool.
“This not only secures my financial future but also optimizes my tax situation annually,” she added. “It’s crucial for women, especially those who may have nonlinear career paths, to focus on this to ensure financial stability in later years.”
Kirby agrees. “The best ways for women to build long-term wealth are the tried-and-true methods that apply to most people, starting with savings in pre-tax vehicles like employer-sponsored retirement accounts, IRAs and Roths.”
“The next step would be to look at remaining discretionary income and build an after-tax investment bucket,” she said. “All of these should be invested in a diversified manner to keep up with, and hopefully surpass, inflation.”
Other experts like Ham also see this method as an important way to build wealth.
“A retirement account like an IRA or 401(k) is another critical tool for securing financial independence, yet it remains underutilized by many women.”
“These accounts offer tax advantages and, when maximized, contribute to a stable financial future,” he explained.
“Throughout my career, I have encouraged clients, including many women, to consistently contribute to these accounts and to understand the long-term benefits they provide through tax deferral and compound growth.”
3. Creating Passive Income Streams
“I have explored various avenues for passive income, including investing in dividend-yielding stocks and acquiring rental properties,” noted Vanterpool.
“These investments work for me around the clock, contributing to my wealth without my active involvement day-to-day.”
She says this strategy is key for creating a financial buffer that allows for more freedom and security.
Jonathan Feniak, general counsel at LLC Attorney, also sees this as an avenue toward financial freedom.
“I’ve seen firsthand the lack of gender diversity in wealth-building strategies. Many women are missing out on opportunities for long-term financial growth due to unfamiliarity or fear of the unknown.”
He says creating passive income streams, such as royalties from ebooks or revenue from online courses or affiliate marketing, can generate wealth without requiring constant active involvement.
4. Investing in Real Estate
“Real estate investment, particularly rental properties, is a potent wealth-building avenue,” said Feniak. “Yet, it’s often underused by women due to perceived high entry barriers and risk.”
Vanterpool said it’s played a crucial role in her own success. “Real estate has been a significant part of my investment strategy,” she explained.
“I started with a single rental property and have grown my portfolio over the years.”
“This not only generates a steady stream of income,” she added, “but it also positions me to benefit from property value appreciation over time.”
She added: “It’s a powerful way to build equity and wealth.”
Ham similarly recommends this method for growing your finances. “I’ve seen the significant opportunities that real estate investment offers for building long-term wealth, particularly through short-term rentals — an avenue not commonly pursued by women, but immensely rewarding.”
“These properties typically bring in higher rental yields compared to long-term rentals due to the flexibility and premium pricing they can command in desirable locations.”
“At Weekender Management, we focus on maximizing these investments through tailored property management, ensuring properties maintain high occupancy rates and generate substantial income.”
5. Taking Advantage of Other Investment Opportunities
Beyond traditional investments, Vanterpool recommends women continually seek to expand their financial education and explore new investment opportunities.
“Whether it’s through higher education to boost my own business skills or branching into new business ventures, I believe in investing in areas where I can add value based on my expertise.”
Similar to Kirby, Vanterpool believes many women shy away from these wealth-building strategies due to a lack of knowledge or confidence.
“By sharing my personal experiences and the tangible benefits these strategies have brought to my life, I hope to inspire more women to step into the realm of investing and financial planning. It’s not just about growing wealth — it’s about empowering women to achieve financial independence and resilience.”
6. Remaining Skeptical of Speculative Investments
“Interestingly, we get a lot of inquiries from women asking about more speculative methods of building wealth through things like flipping homes, short-term rentals, crypto and multilevel marketing,” said Kirby.
“My theory is that a lot of this is driven by charismatic social media influencers who exploit women’s fears around ‘catching up’ and ‘feeling behind.'”
“While these strategies could be enhancements to a core savings-and-investing strategy,” Kirby added, “it is the rare and special circumstance that someone — woman or man — can build serious wealth in these ways.”
7. Prioritizing Education
“My advice to any woman looking to build wealth is to start with education,” said Vanterpool.
“Understand the basics of investing, get comfortable with the market and don’t shy away from asking for help or seeking professional advice,” she highlighted. “It’s also crucial to start small and gradually build your investment portfolio over time.”
As a professor, Ham says the crux of the issue often lies in access to information and tailored financial advice. “By providing education on these subjects through my roles at the university and in my professional practice, I aim to empower more women to explore these viable pathways to wealth creation.”
“Real estate, strategic investments in various asset classes and making the most of retirement saving options can substantially increase financial stability and freedom for women,” he added.
“Yet these tools are significantly under-leveraged in their financial strategies.”
Vanterpool also urges women to think of the long game. “Building wealth is a marathon, not a sprint,” she highlighted. “It requires patience, persistence and a proactive approach to seizing opportunities and learning from them.”
“As women, taking control of our financial futures is one of the most empowering actions we can undertake,” she concluded.
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This article originally appeared on GOBankingRates.com: 7 Ways for Women To Build Long-Term Wealth That Very Few Are Taking Advantage Of
