Investing 101: How to Invest for Single Parents

Onward Staff
June 28, 2023
Start managing shared expenses with your co-parent easily!

Investing 101: How to Invest for Single Parents

Being a single parent comes with its own set of challenges, especially when it comes to financial planning and investing. But fear not! In this blog, we will guide you through the basics of investing and share valuable tips for successful investing as a single parent. We will cover everything from setting realistic financial goals and creating a budget, to researching and selecting the right investment products. You'll also learn about the best investments for single parents, including low-risk options like CDs and savings accounts, as well as more growth-oriented investments like stocks and real estate. Of course, we will also discuss the risks associated with investing and how to manage them effectively. So if you're ready to take control of your financial future as a single parent, keep reading!

How to invest... What is investing?

Investing is the strategic allocation of money or resources in assets like stocks, bonds, or real estate with the aim of earning a profit or achieving specific goals. It comes with risks, so it's crucial to research and understand investment options and strategies before making any decisions.

Tips for successful investing as a single parent

Successful investing as a single parent requires careful planning and consideration. Follow these tips to make informed investment decisions that align with your goals. Prioritize financial stability and build an emergency savings fund. Set clear financial goals and create a budget for investing. Consider low-risk options like mutual funds, index funds, or ETFs. Don't be afraid to follow the stock market, over the past 5 years the S&P 500 (which follows 500 of the largest companies on the stock exchange) has increased by 61%. Automate investments for consistent contributions and compound interest. Seek guidance from a financial advisor. Diversify your portfolio across different asset classes to spread risk and potentially increase returns.

Set realistic and achievable financial goals

To set realistic financial goals as a single parent, follow these steps:

1. Assess your financial situation and long-term needs.

2. Build an emergency fund before exploring more complex investments.

3. Research different investment options and choose ones that align with your goals, risk tolerance, and objectives.

4. Diversify your portfolio to spread out risk and increase chances of consistent returns.

5. Consult a financial advisor who specializes in working with single parents for personalized strategies.

Budgeting is crucial too:

1. Determine the amount you can allocate for investing and identify areas to cut expenses.

2. Budget wisely to ensure regular and consistent investments without harming the funds in your bank account.

3. Automate investments through a brokerage account, robo-advisor, or employer-sponsored plan.

4. Automation saves time, promotes discipline, and simplifies the investment process.

By following these steps, you can work towards achieving your financial goals effectively.

Create a budget and stick to it

Creating and sticking to a budget is crucial for successful investing as a single parent. Set financial goals and incorporate them into your budget to allocate funds for investing. Identify priorities, such as retirement savings or your child's education, and cut back on unnecessary expenses to free up money. Regularly review and adjust your budget, and consult a financial advisor for guidance on investment plans that align with your objectives. Stay disciplined and follow your budget to achieve financial success.

Consider hiring a financial advisor

Hiring a financial advisor is crucial for single parents on their investment journey. These professionals create personalized investment plans based on your goals, risk tolerance, and time horizon. They provide valuable insights, expert advice, and help diversify your portfolio. A specialized financial advisor can assist you in navigating tax implications and making well-informed investment decisions. Working with a reputable financial advisor who specializes in assisting single parents is a smart move. With their expertise, you can confidently navigate the investment landscape and find strategies that align with your unique financial situation and long-term objectives. Embracing their guidance empowers you to make educated investment decisions and greatly enhances your chances of achieving your financial goals. According to a report by Charles Schwab, 58% of Americans say they will use some sort of robo-advice by 2025.

Researching and selecting the right investment products

Researching and selecting the right investment products involves careful consideration of your financial goals, risk tolerance, and available funds. Begin by assessing how much money you can comfortably invest and determine your investment objectives. Once you have a clear understanding of your financial goals, it's time to research different investment options such as mutual funds, ETFs, individual stocks, bonds, real estate, and more. Consider seeking advice from a financial advisor to get personalized guidance based on your specific situation and risk tolerance. When selecting investment products, keep in mind factors like fees, historical performance, and the expertise of the fund manager. It's important to diversify your investments to spread out risk by investing in multiple asset classes or sectors. Additionally, stay informed about market trends and economic news that may impact your investments. Regularly reviewing and adjusting your investment portfolio as needed is crucial to ensure it aligns with your goals and risk tolerance.

Automate your investments and focus on diversification

Automating and diversifying investments can maximize returns and achieve long-term financial goals. Automate your investments by regularly investing a fixed amount through a brokerage account, investment app, or employer's retirement plan. Diversify by spreading investments across asset classes, sectors, or industries to reduce risk and increase chances of success. Proper asset allocation and diversification can help manage risk and boost returns.

Utilize low-cost or free brokerage options

Single parents can smartly grow their wealth by utilizing low-cost or free investment options. Buying low-cost index funds or using robo-advisors is a great way to invest without breaking the bank. Participating in your employer's retirement plan, like a 401(k) or 403(b), is another option for low-cost investing. Setting up automatic contributions to your investment accounts helps you stay consistent and take advantage of dollar-cost averaging. Diversifying your investments across different asset classes spreads out your risk and increases chances of higher returns. Keep an emergency fund separate from your investments to provide a financial safety net for unexpected expenses.

What are the best investments for single parents?

The best investments for single parents vary based on their financial goals and tolerance for risk. Options like stocks, bonds, mutual funds, and real estate are common choices. Diversification and asset allocation should be considered. Consulting a financial advisor can provide personalized guidance for the optimal investment strategy.

529 College Savings Plan

One investment option that can be particularly beneficial for single parents is a 529 College Savings Plan. This plan allows you to save for your child's education expenses in a tax-advantaged manner. By contributing regularly to a 529 plan, you can help ensure that your child has the financial resources they need to pursue higher education without taking on excessive student loan debt. Additionally, some states offer tax deductions or credits for contributions made to 529 plans, further incentivizing saving for education.

When considering a 529 plan, it's important to research and compare the options available to find one that best fits your individual needs and goals. Look for plans with low fees and a wide range of investment options to maximize your potential for growth. It's also worth considering whether the plan allows for flexibility in case your child decides not to pursue higher education or receives scholarships. Remember to consult with a financial advisor who can help you navigate the complexities of 529 plans and make informed decisions.

CDs and savings accounts

When it comes to low-risk investments, single parents have a few options to choose from. One option worth considering is investing in Certificates of Deposit (CDs). These financial products offer a stable and guaranteed return on your investment over a specific period of time. CDs are a great choice for single parents who are looking for stability and want to minimize risk. Another low-risk investment option is a savings account. Savings accounts provide easy access to funds and offer a safe place to store money. While the returns may be lower compared to other investments, savings accounts are a reliable option for single parents looking to build an emergency fund or save for future expenses. Additionally, bonds are considered low-risk investments that offer fixed interest payments over a set period of time. They can provide steady income and are worth exploring as part of a low-risk investment strategy for single parents.

Mutual funds and ETFs

Investing for single parents involves careful consideration of various investment options. Mutual funds and exchange-traded funds (ETFs) are particularly appealing due to their diversification and professional management. These investment vehicles pool money from multiple investors and can be customized to individual risk tolerances and investment goals. When exploring mutual funds or ETFs, it is essential to review factors like expense ratios, historical performance, and fund management. By incorporating mutual funds and ETFs into your investment strategy, you can benefit from their potential for long-term growth. Whether you prefer the diversification provided by mutual funds or the flexibility of ETFs, these investment options can help you achieve your financial objectives. Exchange-traded funds, or ETFs, are similar to index funds that track a specific market index like the S&P 500.

Stocks and bonds

When it comes to investing for single parents, considering a mix of stocks and bonds can be a smart choice. Stocks, which represent ownership in a company, offer potential long-term growth and dividends, making them an attractive option. On the other hand, bonds are debt securities that provide a steady income stream through fixed interest payments. By including both stocks and bonds in your investment portfolio, you can balance the risk and potential rewards. When deciding between stocks and bonds, consider your risk tolerance, financial goals, and time horizon. This will help you determine the right allocation between the two asset classes.

Roth IRAs

Another investment option that single parents should consider is a Roth IRA. A Roth IRA is a retirement account that allows you to contribute after-tax dollars, meaning the money you put in has already been taxed. One of the key benefits of a Roth IRA is that qualified withdrawals in retirement are tax-free. This can be especially advantageous for single parents who may have a lower income during their working years and anticipate being in a higher tax bracket in retirement.

Contributions to a Roth IRA are not tax-deductible, but the earnings grow tax-free over time. This can help your savings compound and potentially provide a

Real estate investments

Real estate investments can be a great way for single parents to establish a stable source of income. By investing in rental properties, single parents can generate monthly rental income and build their financial security. Additionally, real estate investment trusts (REITs) offer a convenient way for single parents to invest in real estate without the hassles of property management. It's important to carefully research and analyze potential real estate investments, considering factors such as location, market trends, and potential returns. Diversifying your investment portfolio with other types of investments, such as stocks, bonds, or mutual funds, can further mitigate risk and enhance potential returns. By taking a diversified approach to investing, single parents can maximize their financial growth and provide a solid foundation for their family's future.

Investing in a business or franchise

Investing in a business or franchise can be a great way for single parents to generate additional income and build wealth. By investing in a business or franchise, single parents have the opportunity to take control of their financial future. It allows them to diversify their investment portfolio and potentially earn higher returns. However, before making an investment, it is crucial to thoroughly research and evaluate potential opportunities. Factors such as the industry, market demand, competition, and financial projections should be carefully considered. Seeking advice from professionals, such as business consultants or financial advisors, can provide valuable guidance and support throughout the investment process. Additionally, it is important to take into account your own skills, interests, and resources when selecting a business or franchise that aligns with your goals and values.

What are the risks associated with investing?

Investing carries the primary risk of potential financial loss. Market volatility can cause fluctuations in investment value, and there is a risk of not meeting expected returns or investment goals. It's crucial to assess and manage risk based on the varying levels of risk associated with different types of investments when learning how to invest.

Market volatility and downturns

Market volatility and downturns pose significant risks to investors. It's essential for single parents who are investing to understand and manage these risks. As an investor, you should be aware of the fluctuations in stock prices and other investment values that come with market volatility. These fluctuations can lead to temporary losses or reduced returns on investments. Moreover, downturns occur when the overall market experiences a decline in value. To navigate market volatility and downturns successfully, it's crucial to consider your risk tolerance and financial goals before investing. Diversification and a long-term investment strategy can also help mitigate the impact of market volatility and ensure a more stable investment journey.

Inflation risk

Inflation risk is a vital consideration when it comes to investing. One aspect of inflation risk revolves around the possibility that your investments may lose purchasing power over time because of rising prices. It's crucial, therefore, to identify investments that can outperform inflation and deliver returns higher than the rate of inflation itself. Stocks and real estate are both known for their ability to outpace inflation over the long term, making them excellent choices for combating inflation. On the flip side, fixed-income investments such as bonds or savings accounts may not be as effective due to potentially lower returns relative to rising prices. To manage inflation risk, it is important to diversify your portfolio across different asset classes, thereby reducing the impact on your overall investments.

Interest rate risk

Interest rate risk is a crucial element to consider when investing. This risk stems from the potential impact of changes in interest rates on the value of your investments. It's essential to grasp the effect that interest rate fluctuations can have on your investment returns. For instance, when interest rates increase, bond prices typically decrease, which can have a negative impact on your investment portfolio.

To mitigate the risk associated with interest rates, it is crucial to diversify your investment portfolio. By spreading your investments across various asset classes, you can potentially minimize the influence of interest rate changes on your overall returns. Staying updated on current market conditions and seeking advice from a financial advisor can also help you in making well-informed investment decisions.

How to Invest - Frequently Asked Questions

How can single parents balance investing with other financial responsibilities?

Single parents can balance investing with their financial responsibilities by prioritizing budgeting and saving, automating investments for consistency, exploring flexible investment options, and seeking guidance from a financial planner who understands their unique situation.

What are some investment options that are suitable for single parents?

Single parents looking for investment options can consider diversified mutual funds for a mix of different assets, or low-cost exchange-traded funds (ETFs) to invest in specific sectors. Real estate investment trusts (REITs) or rental properties can also be considered for long-term wealth accumulation. Setting up a 529 college savings plan is a smart choice for saving for a child's education.

Are there any tax considerations or benefits for single parent investors?

Single parents who invest may be eligible for tax benefits, such as the head of household filing status and tax credits like the Child Tax Credit. Consulting with a tax professional or financial advisor is crucial to understand the specific advantages and implications of their investments.

How to build a diversified investment portfolio as a single parent?

As a single parent, you can build a diversified investment portfolio by setting clear financial goals and understanding your risk tolerance. Invest in different asset classes like stocks, bonds, and real estate that align with your goals and risk tolerance. Regularly review and rebalance your portfolio to maintain diversification.


Investing as a single parent can seem daunting, but with the right knowledge and strategies, it can be a great way to secure your financial future. By setting realistic goals, creating a budget, and diversifying your investments, you can how to invest with confidence. Remember to consider low-risk options such as CDs and savings accounts, as well as higher-risk opportunities like stocks and real estate. While there are risks associated with investing, staying informed and making informed decisions will help mitigate those risks. Have any questions or insights about investing for single parents? Leave a comment below and let's start a conversation!

Start managing shared expenses with your co-parent easily!

Onward Staff