Are you looking to put your money to work in the market through investment trading? If you’re a woman, you may be scared to dive into the world of finance that has long been dominated by men. In a study by financial services giant Fidelity Investments called “Women and Money,” fewer than 9% of respondents said they think women might be better traders than men.
Yet, the data suggest just the opposite. The same Fidelity survey and many other studies suggest that although fewer women buy stocks than men, those who do take the plunge might be better traders than men and outperform them when it comes to investment returns.
In 2017, Fidelity Investments analyzed over 8 million client accounts and found that women earn higher returns than men by about 0.4%.
Fidelity said the number might seem small at first glance, but can have a “significant impact” over time. A similar study by the Warwick Business School reviewed 2,800 men and women investors and tracked their performance over three years. Researchers found an even greater gender-based outperformance. The group of women outperformed males in the study by about 1.8% per year.
So how are women gaining the edge and investing more intelligently?
1. Women Avoid Risks and Favor Security
Women are more risk-averse than men and tend to take a slow and steady approach when it comes to investments. According to a BlackRock Investor Pulse survey, 72% of women don’t put their money in risky equities, bonds or real estate, while 59% of men do. Being a little more cautious and not buying the latest trend are actually working in favor of women.
The Warwick study said that unlike men, women like to invest in age-based and widely spread products when it comes to savings. By investing in a fund with a good track record and spreading their investment over a great number of companies, women hold more diverse portfolios and typically experience fewer losses.
2. Women Look At Long-Term Goals
Instead of focusing on the thrill and competition, women view investments as tools to achieve their family and life goals. That’s why their strategy is more conservative and patient. Women believe that to be on track of accomplishing their financial goals, they need to avoid switching stocks and consider market volatility.
3. Women Take A Hands-Off Approach To Investing
In general, females choose to do buy and hold, as well as allow their funds to gain a better return over time. The Warwick study said that while women investors traded nine times each year on average, men traded 13 times. This means that women are 35% less likely to make trades, helping them save plenty of fees and outperform.
Breaking Gender Barriers
Women are making breakthroughs in the investment scene, but there is still a long way to go to close the gender gap in the financial world. Deeply entrenched gender stereotypes about women and concerns on how they handle money are hindering growth. But the economic arguments for the need to invest in women are compelling.
A study by Peterson Institute for International Economics finds that having at least 30% of women in leadership roles can add 15% to a company’s net profit margin. In 2015, First Round Capital evaluated 300 companies and 600 founders. The 10-Year Investing Report said women were the winners in post-money performance and outperformed men by 63%.
Start Investing More
Women investors are driving financial success but more must be done to influence behaviour and attitudes toward women and money. While the financial sector should be more welcoming to women, women should also be more confident in making financial decisions and embrace their roles as investors.
Regardless of whether you’re a man or a woman, the earlier you start on your investment journey, the better. Learn more about stock markets through family, peers, and mentors and increase your financial knowledge and activities. To make sure you’re on track, know what you own and what you owe before investing.
Even if you start investing with little money, you can find the right investment to put your money on. Go for affordable investments first and study financial instruments. Be smart about investing by setting your financial goals and managing a doable timetable.
Take things slow and steady, but be mindful about your wants and needs. Are you aiming for financial freedom? Do you want to invest in a home or condo? Are you setting up your emergency and retirement funds? With these goals in mind, you’ll be more motivated to develop strategies and grow your money.
Sooner than later, you’ll be a pro at making regular investments and reaping the long-term benefits of higher returns. The investment world will be yours for the taking.
Author: Meghan Roces
Meghan Roces is considered a social butterfly due to her overwhelming energy and charisma, as proven by people who get to meet her. She’s a lifestyle blogger by day and TV geek by night.