Ok, 2018. Let's do this.

2018 has started with a bang. TIME’S UP is taking New Year’s resolutions to a whole new level, with 300 of Hollywood’s most powerful women coming together, putting real initiatives and real money behind breaking the cycle of harassment and inequality in Hollywood and working-class jobs. That includes $13 million in a legal defense fund for individuals who have suffered sexual harassment, assault, or abuse in the workplace.

In other words, these women are using their clout and economic power to catalyze real change.

Not just for themselves, but for others: women (and men) who don’t have the same financial power that they do.

Financial power is something you may have heard us talk about at Nanda Paresh before.

Because money is not just money. It’s a means to drive change. It’s freedom; it’s confidence; it’s take-this-job-and-shove-it; it’s giving to a cause that you care about and that can make the world a better place. Money is power. It’s being able to come together to effect change when the institutions we were taught to trust have failed us….as TIME’S UP is doing.  

Investing historically has served as a means to building more wealth — and so to driving change — that has felt inaccessible to many women, regardless of their wealth level.

The numbers tell the story of the potential power of investing:

If you had a traditional IRA with $10k invested in a 60/40 portfolio (meaning 60% in equities and 40% in bonds) on 1/1/17, today it would be worth $11,381.

If you had invested the same $10k in the same investment portfolio five years ago, today it would be worth $16,037.

Ok, you may say, but those were good markets. What if you were the world's biggest investing klutz and invested at exactly the wrong time? You might be surprised:

If you had invested that $10k on January 1, 2007, right before the subprime crisis, you would have $20,822 today.

And if you had invested it on January 1, 2000, right before the internet bubble burst, you would have $26,931.*

Well, what about going forward? Have you missed the boat?

We estimate that if you were to invest that same $10k today in an IRA and make investing a habit, so deposit $100 every month — in 20 years, you may have $67,860.** (We estimate the probability of this at 70%.) Could be more, could be less; but you get the point.

And what if the market goes down?

Let’s be clear: It will. It always has. Thus our forecasts include both down and up markets. But historically the up-markets have outnumbered the down-markets to make investing look like a better alternative than the bank, as shown above. And if you make investing a habit (say, a bit out of every paycheck), that has been shown to be an effective strategy over the long term.

Women don’t need to be “empowered.”

(Definition of empower: to be given power.) We have power: economic, financial, and social power. It’s a question of how, and for what causes, we choose to use it. We can’t wait to see how you, and other women, use that power in 2018.

All opinions and views expressed by Nanda Paresh are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third-party’s products or services.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment, or tax advice. 

Information was obtained from third party sources which i believe to be reliable but are not guaranteed for accuracy or completeness.

** We assume a $10,000 initial investment and monthly deposits of $100 in an IRA over a 20-year horizon. The portfolio is invested in a 91% equity, 9% bond portfolio, rebalanced to this allocation for the first 15 years, and grows increasingly conservative to reach 51% equity at the end of the 20-year horizon. The results assume re-investment of Interest, dividends and realized gains, and were determined using a Monte Carlo simulation — a forward-looking, computer-based calculation in which we run portfolios through hundreds of different economic scenarios to determine a range of possible outcomes.

Backtested performance is hypothetical (it does not reflect trading in actual accounts) and is provided for informational purposes only to indicate historical performance. Forecasts or projections of investment outcomes in are estimates only, based upon numerous assumptions about future capital markets returns and economic factors. As estimates, they are imprecise and hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. 

The practice of investing a fixed dollar amount on a regular basis does not ensure a profit and does not protect against loss in declining markets. It involves continuous investing regardless of fluctuating price levels. Investors should consider their ability to continue investing through periods of fluctuating market conditions.