Letting your hard earned savings lay around on your bank account might actually cause a loss in value given yearly inflation etc. You shouldn’t allow your savings to be that lazy and let them work for you. How? Through building a diversified financial investment portfolio and investing in asset classes you understand. Beginner investors are usually overwhelmed by financial offerings and are too scared to start getting into this world - especially young women. Yet, more and more women are finally breaking through traditional barriers and educating themselves on investing to save their money more sustainably. We are extremely proud to see this movement, as we at Konvi are also two female founders who started to tackle this whole topic in our early 20s. Therefore, we are excited that we had the opportunity to talk to FinanzFreundinnen, a team of female finance professionals helping beginner investors to understand the benefits of investing and supporting people to get closer to their own definition of financial independence. A huge thank you to Janika from FinanzFreundinnen and please check out their website for more info.

1. What motivated you to create your Instagram channel for women and what is your vision with FinanzFreundinnen?

We founded FinanzFreundinnen with the goal to offer women better access to stock market and investment knowledge and to show that every woman has the opportunity to do something for her financial freedom. Because traditionally, the stock exchange floor is still considered a male domain and women are not given easy access. "Time for that to change," we thought to ourselves and founded Finanzfreundinnen. Poverty in old age is female - and that must not be the case! That's why it's more important than ever to make provisions for your own retirement!

2. How do you define financial independence?

We think that there is no universal definition of financial independence, but that everyone understands it differently. For some people, financial independence means having their own income and being independent of their family or partner. For others, it means taking at least one big vacation a year without having to save money elsewhere. For still others it means not having to work anymore, and for many it simply means not having to worry if, for example, a new car has to be purchased, the washing machine breaks down or other unexpected, costly events occur. What unites all these definitions is the desire for a certain carefree attitude to finances. To be able to sleep well at night without having to worry about certain purchases, running costs or the like, and at the same time to be able to indulge in certain things. Ultimate financial independence, on the other hand, is being able to live completely off one's investments.

3. What tips can young women use to work towards their financial independence?

The most important thing: Start! Disassociate yourself as quickly as possible from negative beliefs such as "Finances are so complicated, I don't understand them anyway" or "The stock market is totally risky”. No, because it would only be risky not to take care of your own finances and to rely on the state pension in old age. And it is enough to start with small steps or small amounts, then one thing after the other will result. You can set up an ETF savings plan for as little as €25 a month and the first step is done! You can even claim this via capital-forming benefits through your employer! You will see, if the first step is done, you will immediately sleep better and notice that the topic is really fun. The most important thing is to keep at it and steadily expand your investment options.

4. What do you think is the reason why many women still shy away from financial topics and personal finance?

We think that for the most part it's still the false beliefs I mentioned earlier. If you look at the shareholder structure in the USA, for example, you quickly realize that many people, especially here in Europe, have a certain shyness and prejudice towards the subject of the stock market. Many also think that it is only worth investing when you already have a large sum of money. We would like to get these beliefs and prejudices out of the way. In addition, there are some important points to consider before starting to invest. For example, you should compare your monthly income with your monthly expenses and be aware of what cash flow you have left at the end and which items you could "cancel". Or to get an overview of your own insurances and contracts. Often you can save quite a bit of money through such "clean-up actions", which you can then invest sensibly (on a monthly basis). The important thing is to take the first step and just get started.

5. What do you want to pass on to young women who tend to be risk-averse and have therefore avoided investing up to now?

"Have the courage, it's worth it!" Realize that it doesn't make sense at all to just leave your money in your account. Because what many don't take into account is inflation, which is the rise in the price level of an economy. If prices rise, you will naturally receive fewer goods and services for sum X. With an inflation rate of 2% per year, your money loses 2% of its value every year (due to COVID, of course, the inflation rate has increased significantly). In addition, we live in an age of low interest rates and there is hardly any interest on savings accounts and the like. If you reflect this once it becomes clear that there is actually no way around the stock exchange, if you would like to increase your money meaningfully (and/or even keep it stable). You don't have to "gamble", do day-trading or anything similar, which is generally considered rather risky if you have little previous experience. A solid basic investment in broadly positioned ETFs (e.g. in the form of a monthly savings plan) and later, if necessary, adding large blue chip stocks to the portfolio is certainly quite sufficient for the risk-averse investor. Conclusion: The biggest risk is to do nothing at all!

6. How important is portfolio diversification for you and with which different asset classes do you diversify your financial portfolios?

A proper diversification is the be-all and end-all! As the saying goes: never put all your eggs in one basket. You should always make sure to invest in different industries and countries, because there can be turbulences from time to time and diversification ensures that losses in one value can be compensated by gains in other values or do not have such a strong impact. Just imagine if you had bet everything on Wirecard... Therefore: diversify broadly and don't "fall in love" with individual stocks.

7. Do you have any tips for young women who want to diversify their portfolio with little money?

Since it makes little sense to invest relatively small amounts (< 500-1,000€) in individual stocks (especially blue chips), it is advisable to start with ETFs. Here, there are well-known, broadly diversified ETFs on indices such as the MSCI World, which includes over 1,600 companies from 23 industrialized countries and is therefore per se already quite well diversified. Those who then want something more with monthly savings rates, for example, could also look at emerging markets ETFS or those on specific themes/industries in which he/she believes (digitalization, etc.). The important thing is to be well informed in advance and only invest in industries/sectors that you understand.

8. What do you think about alternative asset classes like limited physical assets, such as exclusive watch models, rare wine, limited handbags like the Hermès Birkin Bag or investment-grade whiskey?

These are certainly exciting asset classes for individuals who have a passion for these topics. Especially as an addition to a financial portfolio, these tangible assets are an interesting investment opportunity for passionate collectors. For new investors who are not yet familiar with these specific investment opportunities, we recommend starting with broader, more well-known asset classes.

9. At Konvi, we try to educate first-time investors about economic issues while showing them the alternatives to the stock market. At FinanzFreundinnen, it's also very clear to see your passion for financial education for women; what are your hopes for the future for women and investing?

We hope that we can reach more and more women with our call to dare and finally get started. The stock market is not a jungle, and it's not rocket science. You just have to be willing to take the first step and be open. We would like to support you in this.

10. What is one message you would like to share with all investors?

Don't be afraid of the stock market! In fact, the stock market is great fun once you've taken the first step and see what's possible. Besides, you don't have to be rich to steadily build up a solid fortune, already from 25€ per month you can lay the foundation for financial independence.

Disclaimer: no financial advice

Read the original interview in German here.