Investment – it’s a man’s world, right? Women are happy to have savings accounts, but when it comes to stocks, shares and other investments, it’s the men who get results, not women.
Thankfully, that previous statement is a complete mythology. There’s no evidence to support the statement that only men are adept at investment. In fact, according to recent research, it’s women who are better than men at investing – despite the popular conception that investment is purely for the boys. Here’s some more information.
Women are Better at Men than Investing – The Facts
Two academics at the University of California found that, when it came to investment, Women were more successful than their male counterparts. An analysis of 60,000 investors on an online investment-sharing platform showed that women got better returns than men – outpacing them by an average of 0.4 of a percentage point. It also demonstrated that women beat men by one percentage point per annum – not bad results, given that long-term results from the stock market average at approximately five percent a year.
Women aren’t just getting better returns either. When profits fall, women are losing less than men – an average of 2.4 percent, compared to 3.8 percent.
As if this wasn’t enough evidence in itself, further research from HFR (a hedge fund specialist) found that since 2007, funds managed by women had returned 59 percent. Funds managed by men during the same time period had returned just 37 percent. That’s a 22 percent difference!
In brief, investing women absolutely rock!
If Women Are Better than Men at Investing… Why Aren’t They Doing It?
Despite the fact that Women clearly have expertise in this field, far less women than men are actually getting involved in investment. Only 10 percent of women have a stocks and shares ISA. By contrast, 17 percent of men have one. A mere seven percent of Women have other investments or unit trusts – for men, this figure is 14 percent.
Why aren’t more women getting involved in investment? There’s a suggestion that Women are more risk-adverse than men, and equate investment with ‘gambling’ – which offers less guarantee of a return. Indeed, figures show that 53 percent of women would describe themselves as ‘uncomfortable’ with investing, with a further 32 percent saying they’re ‘unsure’.
Additionally, the world of investment is also perceived as a very ‘male’ realm – just look at any stock photo involving investing, and it’s likely to be a man in a suit that dominates the image! But there’s no reason why women shouldn’t invest – and research clearly proves that we’re able to get great results.
Getting Involved in Investment – Some Tips
Providing you know what you’re doing, investing your money can produce lucrative results. Here’s a few tips to get you started:
- Only invest what you can afford. It goes without saying that you should never invest more than you can comfortably afford. Even low-risk investments still involve some element of risk, and there’s always a possibility you’ll make a loss, not a profit.
- Know the options available. There are many different types of investment – including Forex trading and trading on the stock market. Do your research before you get started and find out which type of investment is right for your personal situation. Here’s a guide to help you.
- Manage your money effectively. Before you get started, create a spreadsheet, detailing your monthly outgoings and salary. This will help you budget effectively; and identify just how much you can realistically invest each month. Apps like Account Tracker are particularly helpful, and help you manage your spending across multiple accounts.
- Understand the investment potential. In addition to weighing up the risks, you’ll need to know how to work out potential returns. There are many useful investment calculators online; The Guardian’s version is just one of them.
- Know the fees involved. A word of warning. Most investment products come with fees -and it’s important to factor these in when you’re deciding which product to invest in. Most of the time, it’s fairly easy to see what you’ll be paying, but in some cases, fees are hidden, so it’s vital to be aware when you’re making your choice.
- A popular approach is to diversify your investments – which means you effectively spread your cash over a range of different investment products. The advantage of this? If one investment performs badly, you’ve got other investments to rely on instead.
- Get to grips with your appetite for risk. Some investments are low-risk – which means you’re less likely to lose money, but your potential to make a big return is reduced. Conversely, high-risk investments offer a lot more potential to make serious money – but there’s also a greater risk that you’ll lose it all. You can work out your appetite for risk here.
Do You Think Women are Better than Men at Investing?
Have you recently got involved in investing? If so, how have you found the experience? Do you think it’s a world that’s still dominated by men, or do you know other women who enjoy investing and generate great returns from it?
If you don’t invest – what is it about investment that puts you off? We’d love to hear your thoughts!
Editor’s note: MoneyNuggets is a personal finance blog for women who want to take charge of their finances, achieve their financial goals and secure their financial future. We are passionate about empowering women.