If you’re a single woman looking to secure your financial future, you may be wondering whether you should be saving or investing your money this year. There’s a lot to consider before you decide what to do with your money, and it can feel overwhelming. Luckily, we’re here to help!
To make this decision, you need to understand what the market is expected to do and compare that to how much you can expect to earn in interest. Of course, you must keep in mind that there is no one-size-fits-all approach.
Ultimately, the decision to save or invest will depend on your own personal financial goals and risk tolerance. The tips below can help you get started on your savings and investment journey and make 2023 your best financial year yet.
Saving Might Be Best in the First Half of the Year
“According to Forbes, the [best] savings rate for 2023 is predicted to be between 4.0% and 4.85%,” June Jia of Canny Trading tells GOBankingRates. “Meanwhile, Dubravko Lakos-Bujas, Global Head of Equity Macro Research at J.P. Morgan, forecasts that the S&P 500 will dip to approximately 3500 points in the first half of 2023 before rebounding to 4200 points by year-end, with the potential for a nearly 20% return within a six-month timeframe.”
What does this all mean? Jia shares that against this backdrop, single women should consider prioritizing saving in the first half of the year, as the rates are relatively high and the stock market might be a shaky bet right now.
Linda Chavez, founder and CEO of Seniors Life Insurance Finder, has similar concerns. “Twenty twenty-three is expected to be a volatile investing year, with some investors expecting the stock market to experience an unpredictable rollercoaster of ups and downs.”
However, things could change later in the year. “During 2023’s second half, withdrawing savings and investing in the stock market may offer greater potential returns, given the anticipated higher expected return rate than savings,” shares Jia.
Consider a Balanced Approach
When in doubt: Diversify your portfolios. “This will allow [single women] to minimize risk while still taking advantage of market growth opportunities,” shares Chavez. “Investing in an assortment of assets, such as stocks, bonds, and mutual funds, can help provide a cushion against losses if one asset class performs poorly.”
That way, you can focus on long-term investments that provide a steady return over time and also make shorter-term trades that can be more lucrative in the short term but are also more prone to sudden shifts in the market.
Create an Emergency Fund
Saving and investing are always a good idea, but having an emergency fund is probably the best idea of all. So, before you decide what to do with a little extra cash, make sure your rainy day fund is topped up.
“While a three-month emergency fund is typically recommended for couples, women on their own should save twice as much,” says Carl Jensen, founder of Compare Banks. “Consider your current situation and the items that are essential for you to function on a daily basis, such as shelter, food, and transportation. Take that figure and divide it by six in order to maintain an emergency reserve in a separate bank savings account.”
No Quick Answers
“There isn’t one right answer when it comes to savings vs. investing,” says Shannah Compton Game of Everyone’s Talkin’ Money Podcast. “I’m a big fan of a balanced approach by taking some of your extra money and putting it into savings and using the other half to invest so you can feel like you are making headway on both goals.”
“It’s important for single women to remember that while saving and investing can be risky, it is also an opportunity to build wealth over time,” says Chavez. “By creating a plan that takes into account current market conditions as well as their own risk tolerance and financial objectives, single women can set themselves up for success in the coming year.”
Seek Expert Help
While many experts can guess as to what the market will do next, it is impossible to tell.
“It’s important to note that past performance doesn’t guarantee future results,” shares Beth Rivera, founder and CEO of Best Financial Planners. “It’s recommended to consult with a financial advisor to determine the best approach based on individual financial goals and risk tolerance.”
Consider Your Unique Situation
All that said, the most important thing to think about is your own financial needs and goals.
Patrick Kilbane of Ullmann Wealth Partners shares some questions to consider. “What are the woman’s short and long term financial goals? Does she have any other sources of income? What assets does she currently have working for her? Does she have short term needs for capital? Is she making a down payment for the purchase of a home, a college tuition payment for a child, purchasing a new car, paying for a wedding?”
Every woman has unique concerns and considerations and having honest conversations with yourself can help guide you into making the right decisions for you.
More From GOBankingRates