5 min. read
The Financial Guide
Here’s How And Why Women Should Be Investing Their Money
Can you tell me about your background and what motivated you to start Vitamin?
I was born in Costa Rica and grew up there, as the oldest of two girls, until I was 12. Then we started to move around in Latin America. I always had a passion for numbers and money – and luckily my father trusted me with tasks around our family finances from an early age. I was also interested in math and admired entrepreneurs, and with my studies in finance and entrepreneurial management in the United States, I was able to combine my two passions.
Very early on I knew that I wanted to start my own business – but I had no idea in which field to get started as an entrepreneur. After my studies I started my career on Wall Street and gained a lot of knowledge around financial products, as well as how to approach the asset allocation of large portfolios for high net worth individuals. There I started to sell different products, from mutual funds to private equity funds to IPOs.
After my MBA at Harvard, I really wanted to go back in business and began to explore other areas apart from finance, such as marketing and consumer products. This was also the time when I first worked for a startup.
During my second maternity leave, the idea of starting my own business came back to my mind and I couldn’t help but wonder in which fields I could add value. I realised my strengths were a combination of finance, running businesses and my ability to influence and empower women.
At the same time I had a conversation with my sister, who is a super smart and accomplished woman, in which she asked me, “How can I invest my savings?”
I told her to start with an ETF – but she did not know what I was talking about. I began to address the topic with other women. They were all telling me the same and to be honest I was really surprised. I thought to myself “Why don’t they know? What is stopping them from taking care of their finances? What is the missing piece?”
That’s when I had the idea for Vitamin, because I realised that I have the possibility to change womens’ lives.
What is Vitamin and what’s your mission?
“Our vision is to power up strong financial futures for all women.”
Because through womens’ eyes, finance today still looks like this: Financial institutions spend 13 times less on reaching women than on reaching men. 59% of women say they don’t do a good job using investing to achieve their financial goals. Of these women 60% blame lack of knowledge and 34% blame lack of confidence. At the same time, in 2019, 63% of women in Germany received a monthly pension of €900 per month or less, compared to 29% of men.
These circumstances create an investing gap that, together with a barely narrowing wage gap and potential career breaks, will cost a woman a lot of money in her lifetime.
We want to offer women a home for all of their finances, where they can come and learn about the topic in general and also take actions that enable them to have a strong financial future.
We know women really think about milestones when they approach their life in general and their financial life in particular. For those who have not started to set themselves financial goals, we think it’s important to raise awareness for the need to do so. Over time, our financial products will evolve to support women in various ways in the various stages of their lives.
What services and guidance does Vitamin provide women with to start investing their money?
We will offer educational services such as online courses through which women can learn how to “save faster, invest and do it in a goal-based and focused approach.”
Additionally we run our so-called “Money Talks” which are super helpful. Joining a Money Talk is a great starting point for any woman who hasn’t been exposed to finances yet. We hold talks covering various topics, such as financial basics, ETFs, or real estate.
We want women to know their options. What are stocks and bonds? Why are they good for you? Why are they maybe not as risky as a lot of people make them out to be? Why should you invest for the long term?
What is the first step in investing?
In my experience for women the first step in investing is to actually gain the confidence to feel like they are able to take care of their own finances. This is something that I learned a lot during my time as a financial coach. We, as women, need to empower ourselves to believe that we can have an abundant life; to get rid of any blocks that we may have that come from history, or the people around us, or things we have experienced, so that we can actually build up the financial future that we want to create. Many women believe that you need to have a lot of money to start investing. And actually, that’s not true, particularly in the world of today where financial products are so accessible.
Once you have an empowering mindset, the next topic to handle is your income, since this is what you have to start with, and you can build your financial future from there. Once you have your income and a possible increase figured out, the next step is budgeting. By looking at both your income and your expenses, you can determine how much you can save – and then invest! – per month. In my experience it is important to make sure that this money is automatically transferred to your savings account and invested on an ongoing basis. This might sound like a lot of work, but once you have managed to get everything into place, you don’t have to think about it ever again.
What tools does Vitamin offer and how can women use this in their financial journey?
In addition to our courses and Money-Talks we launched our “Discovery Mode” in October which helps you discover how investing feels – without having to jump right into the deep end. You first take a test, just like a personality test, to find out what type of investor you are. Then we will suggest an investment strategy that you can edit and compare to other strategies, to really see how your money could work for you over time. The tool also explains what is a bond, what is considered a risk, what role does my time horizon play? And what does all of that mean for a potential portfolio? Learning through this process is the pre-step towards “real” investing.
What advice would you give to women on why and when they should be investing their money?
There are two pieces of advice that I would like to give. First: Have an emergency plan in place. And by emergency plan or fund I mean money that you have available in case of an unexpected event, for example when your car breaks down. As a woman, as soon as you have an income and the ability to start saving, get to that discipline and set up that fund.
Second: There is never a better time than today.
Once your emergency plan is in place, you should start investing right away. Even if it is with “just” €25. It’s really a matter of mindset and a choice at that point. The beauty is, if you start young, you have this impact of compounding which is huge in your life later on. You will realise the impact of this after a year.
But of course, if you’re a woman that is 45, or 50, and you haven’t started investing, you should still begin to do so. It’s never too late to start saving and investing for your retirement.
How much savings would you recommend having before investing your money?
Like I said before, if you don’t have an emergency plan, then that should be one of your first goals. Whatever you spend every month, you should have three to six times that in cash. If you’re able to save and set up a saving discipline use that to build up your emergency plan and then start investing. In general, the ground rule is to save and invest 15-20% of your income each month.
What are the risks for women in investing their money?
“Any investing comes with a risk.”
By holding cash, you’re already facing a risk. You face the risk of inflation. So having money in cash itself, it’s just risky.
Let’s say you want to buy yourself a pair of shoes today for €100. But you decide not to do so. Instead, you wait for another six months or a year. By then, these shoes are most likely going to cost €103. Why? Because of the pure fact of inflation, prices go up over time. That means you might actually not be able to buy the shoes anymore. That’s not to say that you should go on a shopping tour today – but it means that you should make sure that you invest your money so it can grow over time. You should grow your money’s worth more than inflation.
You can start investing in a whole range of different types of investments called “asset classes.” What is important when you think of this default of your investments is to make sure that you don’t just have one stock or one bond, but “a diversified portfolio”, which is a basket of investments. ETFs or exchange traded funds are a great way to achieve this – they are ”baskets of stocks or bonds.”
So what does that mean? You’re not just buying one stock, you’re buying 100s or 1000s of stocks, often not only in one country or area of the world, but across the globe – depending on the ETF. This means that your risk is reduced. If you hold it for the long term, you’re going to experience the upside of the market.
That’s something Vitamin will enable in our investment solutions.
Can you tell us more about the technology behind Vitamin?
We are fully cloud based and our backend as well as our infrastructure are fully automated, using infrastructure as code on AWS. The technologies we are using allow us to move forward quickly, finding the balance between new and exciting technology versus a strong focus on our users’ needs. Our team is a full-stack product engineering team. We encourage all engineers to take part in user-testing sessions and feature brainstorming to keep sharing the exciting feedback from our users and to understand the huge value in what we are delivering. We are not a fan of silos at all and do not see a difference between the backend or the frontend – we encourage everybody to jump in wherever they would like, to drive curiosity, interest and keep everybody learning if that is what they want.
So what are you waiting for? Start your investment journey today.