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There's nothing I treasure more than the bond I have with some of my closest girlfriends. Whether it's hour-long phone calls, a weekend getaway, dinner after work or a funny thread of text messages, we all thrive off of the special female friendships we've shared over the years.
But it wasn't until recently that I realized the skills we use to maintain these relationships can actually translate well into how we manage our money.
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Speaking with Shari Greco Reiches, a behavioral finance expert and wealth manager at Rappaport Reiches Capital Management, I learned that the work we put into maintaining friendships — such as discussing our values and sticking together in tough times — are actually techniques that can be applied to money management and make us good investors.
"You already do this every day," Reiches says. "And you can use these same skills when investing."
Here are the seven skills women use to build and maintain friendships that can also make them good investors, according to Reiches.
1. We like to talk about our values with one another
Your closest friends understand your values and what's most important to you, and they help you stay true to that.
"Women are values-driven, which sets up a great roadmap to determine how to spend their money," Reiches says.
Understanding your values and how you want to spend your money can help you focus your investment goals, which in turn helps you make a plan.
You're also less likely to jump on the next hot stock tip but consider instead how your investments reflect what you want to achieve in life.
2. We maintain friendships through planning
Whether it's scheduling lunch or a girls' night out, women maintain their friendships by planning times when they can see one another. The same approach applies to investing: Make the time to manage your finances, and it will pay off in the long run.
This means scheduling time to sit down and identify your investment goals, outlining your investing strategy (where you want to put your money to grow) and coordinating a conversation with a financial advisor to make sure you're on track.
"Women are naturally good at multitasking, organizing and planning," Reiches says. "Be the personal CFO of your investments."
3. We benefit from a diverse group of friends
It's likely that your friend group consists of a mix of people from all walks of life, childhood and college, work and extracurriculars, friends you met through family and spouses and friends of friends. The list goes on and on.
"We benefit from this variety of friends," Reiches says. Just as we are better for the diversity of our friends, so too are our investment portfolios. You've likely heard it before, but diversification is key to maintaining a low-risk portfolio that will benefit you in the long run.
4. We tell each other how it is
Your closest girlfriends will help you stay honest and true to yourself — and good investors try to do the same.
Instead of getting wrapped up in the day-to-day news cycle and distractions of Wall Street, good investors stay the course. This means tuning out all the chatter and letting our initial investment strategy play out. And when in doubt, we call in an expert to give us a pep talk or help us revise our plans.
5. We love a good deal
Sure, it's a stereotype that women like to shop. But the truth is most women manage their household finances and are often the ones looking at prices more carefully than their male counterparts. This is a good habit to apply to investing as well.
"Successful investors are focused on costs," Reiches says, and they aren't just looking at returns. They're also finding a low-cost fund or ways to save on taxes.
When looking to invest, consider index investing through a brokerage account. Index funds are affordable and offer lower risk than buying individual stocks.
Some of the top index funds are those that track the S&P 500. Charles Schwab's S&P 500 Index Fund (SWPPX) is a straightforward option with no investment minimum. Its expense ratio is 0.02%, meaning every $10,000 invested costs $2 annually. Passive, or index funds, generally have a 0.2% expense ratio, so this is notably low. The Fidelity ZERO Large Cap Index (FNILX) tracks large capitalization stocks, which the website says "are considered to be stocks of the largest 500 U.S. companies," and it has no expense ratio.
The top robo-advisors also offer low-cost diversification. Betterment, for example, has no minimum balance requirements and the annual account fee is a low 0.25% of your fund balance. Betterment investors can take advantage of tax-saving strategies such as tax-loss harvesting (the robo-advisor will automatically sell holdings experiencing a loss to help offset taxes) and a "tax impact preview" tool that shows users how much they might have to pay in taxes before withdrawing funds.
6. We stick together in tough times
"Life isn't always easy," Reiches says. When times get tough, you know you can count on your girlfriends for support.
In the same way that you'll ride out any storm with a friend, good investors don't throw in the towel when the market takes a downturn. "The biggest detriment [to your portfolio] is not sticking to the plan and getting out when things get bad," Reiches says.
7. We rely on one another to manage our emotions
A friend is always a phone call away, and investors can turn to professionals when they feel uncertain about their next move. Investing can get emotional and having a financial advisor to lean on can be crucial during those times.
Good investors seek out advisors who can help them stay on track throughout their investing journey and offer support when it's time to make changes to their portfolios or overall goals.
For access to an advisor, there are a few robo-advisors that offer the perk at very accessible rates. Ellevest members can get a discount on 1:1 sessions with Ellevest financial planners and career coaches that start at just $38 (20% discount for Essential members, 30% for Plus members, 50% for Executive members; learn more about Ellevest's different membership tiers).
Ellevest stands out as a strong option for women because its platform algorithm considers important realities of women's lives, such as pay gaps, career breaks and longer life expectancy, so women can get a true sense of where they stand financially.
For those with a large amount of cash to invest, consider Betterment. Its premium plan requires a $100,000 minimum balance, but users get unlimited access to a financial advisor. You don't have to be a premium user to get advisor access, however. One-time advisor consultations for non-premium users cost a fee ranging from $199 to $299.
As you explore different ways to improve your financial self, remember to tap into those effective habits and skills that you've already made a part of your everyday life. As it turns out, being a good friend and a good investor can go hand in hand.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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