When it comes to investing, there’s a clear difference between men and women investors. Male investors tend to take bigger risks and lose as much as they gain. Women, on the other hand, don’t and often keep a larger proportion of their income in savings. According to the latest data, women save around 8.3 percent of their earnings compared to 7.9 percent for men. Women who invest tend to focus on how to pay the lowest fees and which investments are the most socially responsible.
So given these differences, it suggests that women should invest in a different way to men. Let’s take a look at what some of the experts have to say to female investors.
Prince charming probably isn’t out there
Satoshi Watanabe from Hiroshima University wanted to find out about women’s expectations for their financial future. He discovered that most women think that a sort of modern-day prince charming will come and sweep them off their feet in their golden years, providing all the money they need for retirement. Watanabe points out that this actually has the effect of reducing their drive for future financial success and actually means that they end up having less money in total. Key takeaway: invest prudently and early, and work hard to build wealth.
Brush up on knowledge
According to data from the Fidelity study, women already control around 51 percent of the wealth in some western countries. In the US, this is expected to rise to more than two-thirds by the time the decade is out. But many women say that they don’t like investing because they feel that they don’t have enough experience. Capital One found that women thought that investing was too complex and that they lacked confidence. It’s a good idea, therefore, to start downloading podcasts and flicking your way through some books on the subject. Yes, there’s a lot of jargon, like derivatives, forex spreads and “alpha,” but once you’ve got your head around it, it really isn’t that difficult to understand. The crucial tool for investors is their intuition about which assets will perform well, and which will perform poorly.
Invest in ways that improve the world
As discussed in the introduction, women are more likely to invest in “good causes.” According to Jennifer Ellison, principal at a wealth management firm in San Francisco, many of her female clients are into social responsibility. Being socially responsible and building wealth used to be two conflicting goals, but with the rise of clean energy companies like Tesla and SolarCity, that all seems to have changed dramatically. Now it’s easier than ever to turn a profit by investing in those things that are going to make the world a better place, and women can earn money in the process.
According to Ellison, the returns on socially responsible investments turn out to be roughly the same as conventional investments over the long run. In other words, the nature of the economy is changing fast, and women are ideally poised to take advantage of this. Generally, people opt for either mutual funds like TIAA-CREF Social Choice Equity and Vanguard FTSE Social Index when making socially responsible investments.