3 Factors Women Outperforms Men in Investing

If you are a woman and are reading this, then you should know that…

Women are less likely to invest than men!

Yes, that’s true and according to Sallie Krawcheck, a former Wall Street CEO, “In every instance, society tells us that money is for men.”

“For example, the concept that boys are better at Math than girls, which is not true and that men are better investors, which is not true”.

Sallie started Ellevest an investment platform for women and she speaks of the costs to women of not investing later on in life “the inability to quit the job we don’t love, the inability to leave the relationship that has become abusive, the inability to start the business we’ve dreamt of”

However, some research shows that when women do invest, they actually outperform men.

 

Here are 3 factors that give light on how that happens.

1. Type of Investment

“Slow and steady wins the race.”

This is how women approach investing.

According to a datum from the UK’s second biggest investment platform, Interactive Investor, the investing behavior of men and women are fairly similar.  The only difference though is the type of investment they are in.

13% of women held investment trusts compared to men which are at 11%.  And whereas, 20% of women and 19% of men invest in funds.

As a general argument, women favor funds which are less volatile than stocks.

2. Investment Risks

As we all know, men tend to be very aggressive and more of a risk-taker.  Women on the other hand – and generally, are the exact opposite (well, of course with exemption to some).  And being that, women are less likely to make “risky” financial decisions that men.

Why is that so?

According to BlackRock data, 31% of women chose not to invest.  Because they fear that they will lose everything, comparing this to 27% of men.

3. Trading Frequency

With the factors above telling about women’s approach and personality to investing, this third one suggests that women opt to have a long-term investment than men.  This is because women traded shares less frequently, which is about 9 time a year on average.

“Once invested, women tend to monitor and tweak investments less than men,” says Holly Mackay, founder and chief executive of Boring Money.  “This has the double whammy of reducing transaction fees, which are a drag performance, and not trying to time the market which is almost impossible to do and can backfire,” she adds.

 

Why we, women should start to invest?

I found accounts boring when I was at university, mainly because of the way I was taught, it was focused on counting money, rather than using the money to make money

Throughout my 20’s and 30’s, I didn’t even consider investing.  I spent pretty much exactly what I earnt.  And often substituted what I didn’t have with overdrafts or credit cards.

When I had children my attitude to money changed as I had new priorities.  I really got exposed to the idea of investing by accident.  I’d set up a property management/lettings business and went to property networks to promote it.

Through self-education, I began to realise that I needed to change my attitude towards money.  And I couldn’t rely on the teacher’s pension from the career I left to bring up my children.

I started investing in property myself and that opened my eyes to other investments.  Even just putting a small amount aside each month in an ISA or kids ISA can make a big difference over time when the interest is compounded.

I still find that the property networks are very male-dominated, but it’s slowly changing.  I try to educate my kids around money, and my daughter is already saying that she wants to order the preowned lego from eBay so that she can keep more money to save for the future!

Gemma

Gemma

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