A Beginner’s Guide to Investing As a Woman (3 of 5)

4. Build a Safety Net: Establish an Emergency Fund

Before you start investing, it’s wise to first establish an emergency fund. Life is unpredictable, and having a financial cushion can protect you from unexpected expenses like medical bills, car repairs, or job loss. Aim to save 3-6 months’ worth of living expenses in an easily accessible savings account. This emergency fund will give you peace of mind, knowing that you won’t need to dip into your investments during times of crisis. Once your emergency fund is in place, you can start investing with more confidence.

5. Diversification is Key: Spread Your Risk

One of the most important principles of investing is diversification. You’ve probably heard the saying, “Don’t put all your eggs in one basket.” This means that it’s essential to spread your investments across different asset classes, industries, and even geographical locations. By doing so, you reduce the risk of significant losses. If one investment underperforms, others can help balance out the risks. Diversification helps ensure that your portfolio isn’t too reliant on one asset or investment type, which can offer more stable long-term growth.