Invest for success: Tips for money-savvy women

Thinking about diving into the world of investing? Here's what you need to know.

When it comes to financial matters, women are certainly giving men a run for their money. Sixty per cent of single first-home buyers are women, women make the majority of our household spending decisions, and when women invest, their returns outperform those of men by 12 per cent.
Right now, though, house prices are above trend so it's logical to look outside the housing market. Having money in the bank is also not an option with interest rates so low. So where can you look for returns when we have so much market uncertainty and a regional war in eastern Europe?
Justin Grossbard, co-owner of Compare Forex Brokers, provides four areas to consider investing or trading within.

1. The stock market

Everyone knows about shares but finding the right company to invest in can be daunting. Large Australian companies like BHP, Qantas or ANZ are popular choices on the ASX, but there are hundreds of stocks to choose from and the stocks you pick will have a large outcome on the final returns.
Justin recommends that instead of shares, an EFT from a company like Vanguard can often be more practical. This is when the company combines listed shares into a fund which you can invest in. While they are fees for purchasing through EFTs or index funds, they are lower than most other managed financial sites.
If you're looking to invest in shares yourself, the key is to minimise your fees using an online broker such as CMC Markets. Just remember, choosing shares does require knowledge and you may want to invest in a range of shares to reduce your exposure to just one or two company performances.

2. Trading currency

Unlike shares where you invest, you can trade currency through a forex broker. Most people don't realise that the foreign exchange market is the largest in the world, turning over a whopping $6.6 trillion a day.
Foreign exchange trading (or forex for short) involves the exchange of one currency for another at an agreed-upon price. Sometimes this is done for practical purposes – for example, when travelling overseas – but the large majority of these transactions are done to make a profit. Essentially, forex traders try to predict the movements of certain currencies and buy and sell them to turn a profit.
It's important to remember that this isn't investing but trading, and your capital is at risk. It's recommended to always try a demo account first before actually trading on the market.
Investing in the stock market or dabbling in foreign exchange could pay big dividends with the right professional guidance.

3. Trading cryptocurrency

Everyone has heard of crypto, with 28.8 per cent of Australians owning cryptocurrencies last year. Cryptocurrencies do come with high uncertainty and volatility. Individuals that buy and hold crypto are purchasing digital currencies such as Bitcoin, Ripple and Litecoin from a crypto exchange like on the expectation they will increase in value.
Cryptocurrencies are popular because, by their nature, they're highly volatile and speculative, however the future of cryptos is largely unknown, making them very risky.
Justin's personal rule of thumb is to only trade an amount in cryptocurrency you're willing to lose. As crypto has no underlying value, there is no floor to the currency (or ceiling).

4) The derivatives market

Derivative instruments derive their value from an underlying financial asset. Examples of derivative options include options, futures and contracts for difference (CFDs). CFDs in particular are becoming extremely popular - this instrument allows you to speculate on how prices will move in the market in pursuit of profits without owning the actual instrument.
CFD assets you can trade include forex, cryptos, shares, bonds, hard and soft commodities (i.e. gold, silver, coffee) and indices. Trading with CFDs might be the easiest of all options to get started for trading, and since CFD involve leverage, you need very little capital. While leverage can lead to high profits, they are especially risky. For this reason CFD trading is best left to experienced traders who are willing to take on risk.
Let's crunch the numbers on the many investment options available to you.

The underlying rule of investing and trading

One of the main factors that will determine returns are the fees charged during the process. The fees between the big four banks and specialised stockbrokers can be five times higher. The same is true in foreign exchange, with some Australian low spread forex brokers charging three times less fees than some larger overseas brokers.
Always take time to compare the brokers, from cryptocurrency to shares, and minimise your fees. Also make sure the broker is reputable, has an easy to use interface and strong customer support.

What are the risks?

All investment comes with some form of risk. Financial trading to some extent is about trying to profit off the volatile nature of the market. So it follows, you should only risk what you can afford to lose.
When choosing a broker, it's well advised to choose one regulated by the Australian Investment and Securites Commission (ASIC). This provides you with an element of protection as it means the broker can legally operate in Australia and is not some kind of scam broker.
Brought to you by Compare Forex Brokers. Compare Forex Brokers can simplify the process of finding the best broker for your needs. Highly experienced in the finance industry, they provide clear comparison tables of different brokers to present all the facts and details you need in a concise way. There's no technical jargon and no time wasted poring over pages of superfluous information.