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Is chipping away at the gender wealth gap on your to-do list? It may sound like a lofty goal, but in reality, all women have the power to make a difference. It just takes introducing simple habits into your financial life — starting with investing.

As you plan for your future and think through life goals like expanding your family or becoming your company’s first woman CEO, consider investing as an important part of your timeline. Because through investing, you not only give yourself the opportunity to build personal wealth over time, but you may contribute to reducing the disparities in wealth. Here’s how.

What is the wealth gap?

You’ve probably heard of the gender wage gap: Women have earned 81 cents for every dollar paid to men in 2020. And that gap widens even further when comparing women of color to white men. For example, Black and Latinx women earn just 75 cents for each dollar a white man earns. But the wealth gap goes beyond just comparing how much money men and women make, it examines how much money they actually have — a.k.a. their net worth.

Read more: Learn how to calculate your net worth and why this number matters.

The larger wealth gap is affected by differences in pay, but also many other factors — like the lasting penalties and setbacks women in the workforce face if they take time out of their careers to care for children or aging family members, such as fewer promotions, professional opportunities, and increased bias. The wealth gap is also widened because women not only hold more debt than men, they tend to invest less than men, too. All of these elements (among others) have contributed to the growing space between women and men’s wealth, and more so for women of color. Altogether, studies show that compared to each dollar a man owns, women overall have just 32 cents — and Black and Latinx women less than one cent.

Investing can be a wealth building tool.

These numbers can be surprising to read, but instead of letting them discourage you, use them to fuel your financial fire. Many of the money challenges women face and factors that perpetuate the wage and wealth gaps are systemic, but investing in the market is one area where any individual can take control of their financial future — as stock market returns know no gender or race.

Investing has the potential to be a powerful tool for building wealth over time. It’s important to understand that the stock market’s history and past returns do not guarantee future growth and losses are always a possibility. However, the market has returned an average of about 10% annually (before inflation) for the past 100 years. Even factoring in about 2 to 3% for annual inflation, these returns are far beyond the growth that can be achieved by holding cash in a bank account.

By investing, you can harness the strength of compounding returns as well. Compounding is the process in which you earn returns on your initial principal plus your accumulated returns (which could be interest or re-invested dividends or capital gains).

Think of it this way: If you invest $5,000 and make a 5% return of $250, in one year, you will have $5,250 in total. If you earn another 5% return on that amount the next year, you’ll add $262.50 in gains — bringing your total to $5,512.50. Continue this pattern and your gains will increase as your principal plus your past returns grow.

A graphic with a chart and text that states, compounding returns do the work for you. Compounding is the process in which you earn returns on initial principal plus accumulated returns. This chart shows account growth over 5 years with a $5,000 deposit and 5% annual rate of return. 1 year invested would earn you $250. The second year, you would earn an additional $262.50. The third year, you would earn an additional $275.63, The fourth year, you would earn an additional $289.40. And the fifth year, you would earn an additional $303.88. Starting with the initial deposit of $5,000, over 5 years, with a 5% annual rate of return, your account would grow to $6,381.41.

Making Your Move to the Market

Investing as a means to narrow the wealth gap can feel a bit abstract. You may not be able to see how your investment efforts affect your gender or race as a whole. But individually, the effects of investing over time can be profound. Money you invest now can help further your larger financial goals like increased retirement savings, more funds to build and support a family, less need to take on debt, and more. The sooner you get started, no matter how much or how little you invest, the greater opportunity you have to build wealth in the market and increase your financial freedom.

Heading into a new year is a perfect time to make investing a staple in your financial life. Whether it’s putting a portion of your paycheck into a 401(k) or redirecting money each month from your budget into an individual investment account, like our Robo Portfolio, the opportunities to invest are extensive. Plus, you don’t have to do it alone if you don’t want to — and, most importantly, you don’t need experience to get started.

By making investing a part of your plans, you can feel confident that you’re not only taking the reins of your own financial future, but that you are helping to combat the wealth gap — an action that can lift up generations to come.

With an Ally Invest Robo Portfolio, you can start investing with as low as $100.

Open a Robo Portfolio.