Online Investment Expert, educator and speaker Michelle Felton discloses that the only weakness female investors have, is their mistaken belief that they are not good investors
Yes ladies you have read right! Various studies show that women make better investors. However the problem is that many women don’t believe that they have the knowledge or the confidence to do it themselves. My personal investing journey started just over 2 years ago after seeing my husband dabbling, however the big mistake he made was in those days he didn’t stay long enough on the journey. The one thing that women are renowned for is, patience and I decided I wanted to look at the investing opportunities and since then I have never looked back.
For someone with no knowledge of investing I completely understand how it can be a tricky area to start, women sometimes feel especially daunted by the prospect of taking on the challenge of making their money work for them, I certainly know I did. After all, the finance industry is heavily dominated by men. However, women should not worry. According to various studies over the last few years including Fidelity's comprehensive 2021 Women and Investing Study found women make better investors than men. In my own experience over the last few years of investing and working with ladies on different platforms I have also found this to be true.
The study found shared;
Women take on less risk than men
When it comes to investing, women are more likely to take on appropriate levels of risk with their investments therefore making for better investing outcomes.
Women research more diligently
Women are known for putting more time and effort into researching possible investments, looking at every angle and detail, as well as considering alternative points of view. Those women who educate themselves about investing are more likely to make smarter decisions that lead to better results.
Men tend to be more overconfident
In the studies and in my personal experience men think they know more than they do whilst women are more willing to own up to the fact that they don’t know everything and will take advice. The investing confidence of men prompts them to trade more frequently. According to a study by Barber and Odean, men traded the stocks in their accounts 45% more than women did. This excessive flip-flopping of securities reduced their net returns by 2.65%.
Women are more patient investors
They are in it for the long term. Men tend to eagerly invest in the latest hype in the market that everyone is talking about, whereas women do not generally jump on the next shiny bandwagon. My husband is a prime example of this although he won’t admit, on various occasions he has bought the latest new token that everyone is apparently raving about only for it to fail. I was talking to a friend last week and she said her husband is the same, if their peers say something is a good investment they will just jump. Whereas women tend to take their time to explore investment opportunities and stay in their investments longer.
All of the world’s best investors, have a long-term goal in mind. They don’t cash out at the first sign of trouble, preferring instead to hold on and wait for things to improve.
By selling underperforming investments early, not only do you lock-in, or solidify your losses, but you also don’t give your shares and funds a chance to grow.
Warwick Business School found that, typically, women only traded their investments nine times a year, compared to 13 for men.
The research showed women tend to invest to support long-term goals, rather than simply for the thrill of investing. As a result, they were more likely to achieve better returns.
Warren Buffett says that “if you are not willing to hold a stock for 10 years, don’t even consider holding it for 10 minutes”. The key to successful investing is remembering that you’re in it for the long-term. Frequently buying and selling your securities is not investing, its trading.
The Fidelity report concluded that Women outperform men by 40 basis points, or 0.4%, on average. While female investors may be outnumbered by their male counterparts, research suggests of those women that are investing, in general, they make better investors than men.
If female investors have any weakness, it's their mistaken belief that they are not good investors. The Fidelity study reports that only one-third of women surveyed see themselves as investors, meaning only 33% feel confident in their ability to make investment decisions.
Personally I feel more needs to be done on educating women and explaining what investment risks could be. Due to lack of knowledge women are not taking the plunge into investing and are instead saving their money in the traditional way in savings accounts.
This, of course, has risks of its own as money kept in savings accounts earns such low returns its worth very little over time due to high inflation. Money put in the market, on the other hand, can beat inflation and substantially grow assets over time.
Women need to do a lot more financial planning than men. We live on average 6-8 years longer than men, typically make less than our male colleagues, and typically take more career breaks. As a result, women retire with about 2/3 of the money that men do.
In conclusion ladies I think we need to learn this one lesson from men and that is to take action rather than waiting for the perfect time to start investing. This is why I am on a mission to educate women about all the different online investment opportunities that are out there and that we as women are well capable of making investment decisions and making our money grow.