'Risk aware not risk averse': The truth about women investors

‘Risk aware not risk averse’: The truth about women investors

investing

In a recent global survey, women were asked why they invest. Surprisingly the first reason was to fund their retirement, closely followed by a desire to become financially independent.  

Historically, women have always been less likely to invest than their male counterparts, and this is largely due to several myths around female investors. 

The good news is this trend is changing rapidly and women are quickly catching up. As more fintech initiatives become available, women are embracing them and using them as effective tools to create profitable and diversified portfolios. 

Let’s look at some of the facts around women investors and their drive to create financial wealth. 

Women are risk ‘aware’ not risk averse  

The myth that women are risk averse has been perpetuated somewhat by the media and the advertising industry. Each has actively discouraged them by implying females are more prone to excessive shopping and overspending than males.  

Financial advisors have picked up on this and have assumed women want less control over their finances.  

Studies have shown however, that women overall spend more time researching their investments.  So, whilst it is true that men proportionally take more risks when choosing where to put their money, women make calculated and somewhat unemotional decisions.  

As the gender pay gap remains significant, women across many industries typically earn less than their male counterparts. This means they have less disposable income and are more careful about creating a plan and steadily working towards wealth creation. 

Despite women earning less, statistics show they tend to save more. When invested wisely, these small amounts add up over time. When they are placed strategically into a diversified portfolio, they can easily become a profitable investment package in the long term.  

Women approach investing with a different mindset 

Emotional Investments 

A real factor that is often overlooked when investing, is that our emotions can influence our perception. Ironically, in this sector, this translates into men making more impulsive decisions and therefore being more reactive to increasing and declining market trends.  

Women typically take longer to research and learn in the early stages but remain open to advice throughout the entire process. Like asking for directions, they are more likely to seek guidance from a professional before making a financial commitment. For this reason, women also tend to make more calculated and less emotionally driven investment choices. 

It has also been shown that women trade less and remain calmer in turbulent and volatile markets.  Less trades result in a decrease in costs and ultimately an increase in the number of returns.

Perhaps another factor is the ultimate reason women are drawn to investing. Whilst they are less emotional when it comes to making financial transactions, their reasons are highly personal and circle around the long term emotional and financial well-being of those close to them. 

Reasons For Investing 

It is no secret that men and women see the world differently. This is also the case when it comes to investments and finances. As women overall tend to make friends and build rapport quicker, they see the market as a world of opportunities to connect with others. Males on the other hand view it as more of a competitive battlefield. 

Women investors believe it is in their best interest to increase their financial literacy, as a way of securing their financial future and that of their family. 

As a result, women are more likely to focus on the result, rather than the day-to-day performance of their portfolios.  

Women are drawn to investing in opportunities that align with their values 

Whilst we all have a different way of learning, both sexes respond and relate well to stories. Graphs and charts have their place, but overall, women are more inclined to investigate a financial portfolio when they can hear and learn from another women’s experience and story.  

Money matters are discussed, and financial plans are created from a perspective of the benefits to the family unit as well as their ultimate desired lifestyle in their retirement.  

Women are also more likely to take greater risks when they can see that the benefits align with their values. This alignment is more important to them than the act of simply making money.  

Why we need more women investors

In addition to women being more inclined to invest in opportunities that resonate with them, they are also more likely to invest in companies that are led by, or that cater to women. 

This is an important factor as the number of successful businesswomen grows. The more women that succeed and can inspire, the more that will follow in their footsteps.  

With females typically controlling much of the household budget, they are becoming better at financial diversification and calculated investments. 

As the number of females interested in wealth creation grows, communities, podcasts and other resources are becoming more widely available to assist them on their journey. 

Molly Benjamin from Ladies Finance Club and Mariam Mohammed from MoneyGirl have each  created such communities that are focused on women’s financial education.  

Victoria Devine from She’s on the Money – a fantastic podcast, and Natasha Etschmann represent the millennial generation. Both women are passionate about supporting other female millennial investors.  

Laura Rusu from Lensell is a female fintech founder passionate about sharing information and providing a tech platform to help women investors get the insight they need during their investment journey.

These are just some examples. There are many other initiatives out there focused on empowering women to make better-informed financial decisions. 

In today’s uncertain climate, it is more important than ever that you take control of your own financial future. We all want the confidence to know that no matter what happens, our future and the future of our family is secure.  

Don’t wait another day, connect with other like minded investors through ever growing communities, expand your financial education and use technology that supports you to make better informed decisions.

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