Recently I was visiting with a client and her husband when the conversation drifted to lessons that we learned from our parents. Many lessons, in fact, we didn't appreciate until we became adults or even parents ourselves.

We talked of those early years of learning to drive, recalling how excited we were to get behind the wheel and feel that sense of freedom once we passed our exams. Although we didn’t know each other back then, our stories were very similar. Turns out both of our fathers temporarily put the brakes on our dream of immediate driving freedom until we could prove that we could change a tire on our own. We laughed about the mantra — "It's for your own good” — that rang in our ears throughout our childhoods.

Although I am still not an expert at changing a tire, I learned through the years that knowledge can be empowering. The car (and the freedom that it represented) was so important to me that I continued to learn the basics of car maintenance (checking the oil, adding air to the tires, adding windshield washer fluid, etc.). But I also learned the importance of when to call the mechanic.

As Socrates once said, “Awareness of ignorance is the beginning of wisdom.” If you recognize a lack of proficiency, don’t be afraid to educate yourself. Of course, we know we can’t be experts on every topic, but gaining a basic understanding that will help you ask the right questions will benefit you in the long run.

Personal finance is no different. And for women, it’s critical to educate ourselves and not be intimidated to reach out to professionals for further expertise. Did you know that women are now controlling more wealth than ever before? According to a recent article published by McKinsey and Company*, women are either the main breadwinner or a co-breadwinner in the majority of today’s households. Moreover, women are projected to control 35% of the global personal investible wealth by 2025.

So now’s the time to dismiss the notion that "the world of finance is a guy’s thing” and become more proactive about learning the basics. It will truly benefit your personal financial freedom!

Let’s start with a few basic Investing 101 terms...

• Asset allocation is simply the combination of investments that have been blended together to create a portfolio. The author of a July 2023 Forbes Magazine article defines asset allocation as "the process of dividing the money in your portfolio among stocks, bonds and cash."
• Stocks come in many forms. When you buy a particular stock, you are owning a part of a company. If the company for which you invested is doing well, you are likely to see the stock price increase. If the company begins to face challenges, you will likely see a decline. A stock may be considered a bit riskier than fixed income.
• Fixed income is typically viewed as a more conservative way to invest; basically it is investing of money with the expectation that you will unlikely see growth of the initial investment, but you expect to see interest or dividends.
• Capital gains/losses is money made or lost on an investment that is reported on your tax return when it is sold.
• Time value of money is how money decreases in value over time unless it grows faster than inflation.
• Risk management is identifying financial risks you’re willing to take and minimizing impact of the risks from which you need to protect yourself.

My colleague, Julie Brown, CFP®, wrote a blog called Introducing the Savvy: Financial Education Just for Women. In the article, she states "At McKinley Carter we recognize that we are uniquely situated to help women 'do better' with their money." McKinley Carter's Savvy educational initiative is a great resource for women of all ages to access information to instill financial confidence and live their best life — whether it’s local Savvy in-person events, the Savvy Snapshot newsletter, or our Savvy Video Chat series. It’s all about women helping women! To join our Savvy mailing list, click here.

One of the many joys of my career as a financial advisor is having the opportunity to educate others. Financial health is an important aspect in everyone’s life, and I’m happy to offer insights, guidance, and answer questions. No matter your financial comfort level or background, surround yourself with a team of professionals to help you think through your unique personal financial situation so you can achieve financial freedom and independence...as my father would say, "It's for your own good."

Contact one of our advisors to help you take the next step on your Investing 101 journey!

Sources:

* Women as the next wave of growth in US wealth management