Many of my friends painstakingly plan their careers, write out where they see themselves in 5, 10, 20 years, and consider themselves independent-minded feminists. Yet the care and planning they put into virtually every part of their lives don’t always extend to their money — especially their investments.
Managing money is a subject that isn’t taught at any level in school or college. On top of that, traditionally women are rarely asked to take up managing the finances of a family as a first choice compared to their men counterparts. This has resulted in the lack of confidence when women are put in a position where they have to make decisions about their money.
Studies however show that, when they do, women are more successful at making money decisions. As per Fidelity's study in 2021 on Women and Investing, self-directed retail investors who are female consistently outperform their male counterparts by an average of 0.4%, or 40 basis points, every year. here are many reasons why women are behaviourally better equipped than men:
1. Women are great savers
We have known all our life that we are fantastic when it comes to budgeting and saving. Demonetisation in 2016 was a reminder of this, where many home-makers came out to deposit the cash they had saved over many many years. The traditional concept of putting aside money in a ‘gullack’ can easily be adopted using today’s technology to get the desired savings.
2. Women can make smarter decisions under hysteria
Another stereotype is that women are very sensitive and emotional and yes maybe we are but that makes us great leaders as we can connect with everyone we meet and work with. In fact, whenever the family faces any financial, emotional or other challenges, the women of the house become the pillars.
Women can and have kept their emotions aside under distressing situations and taken more reasonable decisions. That is a skill set that comes in very handy in investing, where the markets go swinging and we use this skill set to stay put to logic and basis to the smarter decision required at the moment (keeping all points/statistics and people in mind).
3. Women research for the best options
Whether shopping or investing, we do not shy away from research, effort, and putting more time to find something that best suits our needs and budgets. Because we do not make hasty decisions (most of the time), we avoid most of the bad investments including the many Ponzi schemes. We like to buy everything after checking the labels, options, pricing, and our needs. We could and should do the exact same thing when it comes to picking our investments.
4. Women are great planners and can think/behave long term
Women tend to see the longer-term picture, and can often look beyond short-term problems. Whether relationships or investing, we know things take time to reach their optimum and are comfortable with waiting. Women have the patience that is required to build long-term wealth and make equity investments successful.
We have got the right skill sets that are required to invest and create wealth. The only thing we have to do now is:
1. Start now and start early 2. Make mistakes and learn from them 3. Do not shy away from asking for help 4. Learn more, read more, and educate yourself
We have all come a long way from only investing in gold and cash to exploring mutual funds and stocks today, but we still have a long way to go to take charge of our money. Let's start doing that from today.