Power Move is a three part series all about investing, brought to you by Future Women in partnership with Vanguard Australia. This article recaps the key points discussed in episode 1 with Shannon Nutter, including what is investing and why it's so important.

This article recaps the key points discussed in episode 1 with Shannon Nutter (Vanguard's Head of Proposition and Experience, Superannuation), including:

• What the term investing actually means.

• Why it's so important to invest (particularly for women).

• The four key principles for successful investing.

Investing 101

What is investing?
Investing is simply a way to make money by taking some of your income and building upon it to generate a return over time.

Why should investing matter to me?
How you spend your money and how you save your money matters. It matters to your life right now, how you live, how comfortably you live, but it also matters to your future and how comfortable you're going to live later on.

There's a tendency called present bias that we as humans have. Present bias is, simply put, when we choose to have little rewards now as opposed to a bigger reward later. For example, we might splurge on something today that we want instead of saving up for something bigger and better later on.

Having a savings and investing mindset however is quite important, particularly for women. Research shows that women on average live five years longer than men, which means women will generally spend longer in retirement and require more money to fund those years.

Data also shows however that women on average retire with 47 per cent less superannuation than men, whether that's due to differences in pay, family commitments or other factors. It's therefore incredibly important for women to start thinking about their wealth early on so they can ensure that they have the means to live their chosen lifestyle later down the track.

What are the principles for investing success? 
There are four core investing principles that apply to everyone:

1. Set clear, attainable goals 
What do you want to achieve with your money? Within what time frame would you like to have achieved those things? Make an investment plan before you begin investing and stick to it.

2. Diversify
Think of diversification as a healthy, balanced diet for your investments. Incorporating a variety of assets into your investment portfolio like shares, bonds and cash means you're lowering your risk by not putting all of your eggs in one basket.

3. Be mindful of costs
You can't control the markets but you can control the costs that you pay on your investments. Costs can have a big impact on the future value of your investments so it's always wise to keep them in check. Make sure you understand and factor in the account fees, management fees and brokerage fees before you invest.

4. Stay disciplined 
Day to day changes in the market might seem worrying but the key to investing success is to not let emotions get in the way. Be consistent, maintain a long-term perspective and stay the course even when things get tough.

Another aspect of discipline is the power of investing regularly. Think of these as weekly or daily workouts; just continually adding to your investments, even if it's a small amount, regardless of whether the market is up or down.

For more information on the principles for successful investing, see here.

How do I start investing? 
First, get your finances in order. It sounds simple, but spending less than you earn and removing unnecessary expenses will allow you to have income to invest.

It is also recommended to pay off any high interest credit card debt that you might have and build an emergency fund (typically three to six months' worth of typical expenses) so that in case something happens, you have the ability to take care of it.

After that, it's really just up to you to take the leap and start investing when you feel comfortable and in control. Do your own research, understand the products you are investing in and seek advice from trusted sources when you need to.

Remember, the sooner you start, the sooner you're investing and the longer you have to make your money work for you.

Listen to all three episodes of Power Move today, available on Apple Podcasts, Spotify or any of your favourite podcast apps.

Vanguard Australia