Home ownership has long been tied to being part of the “American Dream,” but after the housing market collapse of 2008, many Americans are no longer seeing real estate as a good investment opportunity. According to the U.S. Census Bureau, only 65% of Americans own their homes, the lowest it has been since 1995, and only 36.5% of people under 35 own their homes, the lowest it has been in over 30 years. A survey conducted by the Washington Post and the Miller Center has found that while most people still believe in the “American Dream,” only 61% of them view owning a home an essential part of it.
But there is one growing demographic that still sees real estate as a worthy investment — single women. Single women currently represent 16% of American homebuyers whereas single men only represent 9%. Many women are now putting marriage off until later in life and see no reason why they should wait to make a move that makes good financial sense for them now. When the New York Daily News interviewed several single women who own their apartments, a common theme was that their mortgage payments were less than what they were paying in rent and it made no sense to be paying upwards of $3,000 per month on something they don’t actually own.
One reason many single women are reluctant to buy property is that they don’t want to be stuck owning a property they might outgrow if they get married and have children. But other single women see the potential of turning their homes into rental properties if they eventually end up needing more space.
The rise in single female homeowners may be partially attributed to a slowly-shrinking wage gap between men and women. On a national level, American women still only earn an average of 79.5 cents for every dollar their male counterparts earn, but the gap is shrinking among women aged 25-44, who are now earning an average of 81 cents for every dollar. Therefore, younger women are starting to have more money than before to invest.
Much like the generation that grew up during the Great Depression, studies have found millennials are very hesitant about investing their money. Many millennials graduated from college just in time for the 2008 recession and struggled to find work in an uncertain job market, facing long periods of unemployment. Those who could find jobs were often forced into taking low-paying jobs just to get by, and between student loan debt and other necessary expenses they simply didn’t have money to invest. Others who weren’t fighting for jobs likely witnessed the impact the recession had on their parents’ investments and have decided not to take the same risk. Instead, many millennials are preferring to keep their money in something they feel is more secure — cash.
Currently, adults aged 21-29 are typically putting about 28% of their money in stocks and keeping about 52% in cash. Non-millennials typically have about 48% of their portfolio invested in stocks and only about 23% in cash. Although keeping their money out of the stock market may seem like the safer choice, but the main drawback to saving that way is that money can’t grow if it isn’t invested, which is going to make saving for retirement even more difficult for millennials who already had the disadvantage of entering the workforce at a very turbulent time. The millennials who haven’t been scared out of putting their money in the stock market tend to be more conservative investors and view their investments as being sort term.
Millennials who do consider investing also prefer to get advice from their parents or a reputable investment counselor. If they’re going to take the risk of investing, they want the guidance of someone they can trust to make sure their money is being invested as wisely as possible.
- Determine Your Financial Goals
What is it that you hope to achieve by investing? Are you looking to buy a home? Do you want to save money for retirement? Saving money to send your children to college? Once you know your what you want, an investment counselor can figure out the best plan to help make your financial dreams a reality.
- Make Sure You’re in a Good Position to Invest
Before investing money, be sure you have no other pressing needs to be taken care of first. Pay off any outstanding credit card debt so you aren’t throwing money away on interest rates. Make sure you have a healthy emergency fund saved up. An emergency fund should have enough money to cover 3-6 months worth of living expenses in the event of sudden unemployment or other crisis.
- Consider Several Investment Opportunities to Diversify Your Portfolio
When it comes to investing, there is safety in numbers. Investing all your money in one or two ways is a bad idea because if one of them takes a hit, you have nothing else to fall back on. But if your portfolio is sufficiently diverse, your other investments should be able to soften the blow of one investment not performing very well.
- How Much of a Risk are You Willing to Take?
All investments involve taking a risk of some sort. It’s up to you to decide if you want low risk investments or high risk opportunities.