Are women better investors? Spoiler alert - they are! (our humble opinion)
There are many myths out there concerning women and investing Here are some money myths that you may have been led to believe, however are completely untrue!
Women are not confident investors
This myth is a result of the constant comparison between men and women. Society has become used men setting the benchmark for a lot of things - especially in relation to finance. When you compare men and women, it’s believed that men tend to invest a lot more but this is NOT because women are not confident investors; rather it’s because unlike men, women tend to want more information on what they are investing in.
There’s a lot of data out there which confirms that women are good investors. The problem is men are usually the benchmark and they tend to be overconfident when investing, making it seem like women are not confident.
A study done by Brad M. Barber and Terrance Odean called Boys will be boys: Gender, overconfidence and common stock investment shows that women are actually better investors. They looked at male and female investing behaviour in 35,000 brokerage accounts and found that the accounts which belonged to women outperformed. This is because the men were overconfident, and this led to returns that were eroding due to over investing.
Women are bad investors
A study by Warwick Business School in June 2018 depicted that the annual investments for men were on average a marginal 0.14% above the performance of the FTSE but the investment portfolios held by women were 1.94% above this.
This study alone debunks this myth. In the USA alone, women are in control of 51.3% of the investable wealth and it is estimated it will go up by 66% by 2030. We need to move away from this narrative that women are bad investors because the data clearly shows that this isn’t the case.
Women are not interested in Investing:
In the past it could be said that women weren’t interested in investing but in recent times this has changed. Women’s wealth is growing, and they are becoming more present in the financial world. eToro, an online investment platform reported a 366% rise in female investors in 2020 alone.
In today’s society, a lot of women are responsible for their own finances as well as their households - especially with the rise in divorce rates. This myth may have been true to an extent in the past but in society today it definitely holds no ground.
Women are risk averse
This couldn’t be far from the truth! Women are just more careful and like to research more into what they are investing in, so they are more aware of the risk involved. According to ATBwealth, women tend to think more long-term and how investments will impact our bottom line over the next 10-20 years.
Women need to think about factors that men may not necessarily worry about. For example, taking time off to care for children or parents. There’s also a wide gender pay gap to consider. Because women have to consider more external factors, they tend to be more careful taking on a lot of risk in comparison to risk.
The bottom line is that women are taking control of their financial futures and are investing in what they understand and what serves them.
Are you a woman who feels like you’re ready to take the next step in investing and building your long-term wealth? Get started with us! (With investment, your capital is at risk)
This article should not be read as personal financial advice. Individual investors should make their own decisions or seek independent advice.