They say that women investors are different to men, and that fewer women invest than men. Why is that?
The Facts about Women Investors
Surveys show that only 31% of Canadian women have a financial plan. A TD Waterhouse poll suggests that women don’t take advantage of investment opportunities because of misconceptions, one of them being the amount of savings you need before getting started.
Although you don’t need a lot of money to start off with, as 45% of women seem to think you do, it is certainly recommended that you determine your investment goals ahead of time. Once your goals are in place, you can put begin to put your financial plan into action.
Why Women Invest Differently Than Men
The survey also found that 53% of Canadian women believe that there are differences in the way women approach investing and how they work with financial advisors. Women consider a number of unique factors that can have a significant impact on the way they invest, including:
- The fact that they often live longer than their spouse
- They may have to take time off work to care for children
- They may have to take time off work to care for aging parents
With the need to feel more confident in their investment decisions, women are said to share a common desire for more financial education and market information. Almost half of the women polled (48%) said they believe that in order to work with an advisor, you don’t need to be an expert. It is uncertain whether or not this means that the remaining 52% believe that you do indeed have to be an expert in order to work with a financial advisor. The truth is, you don’t need to be an expert at all. A good financial advisor will address all of your questions and concerns.
Another poll found that women tended to put safety first, and felt it was more important to avoid major losses than men did. Women also avoid falling below their target rate of return and acting on impulse and incomplete information. “In short,” says the survey’s findings, “Women are more risk-averse than men. And they shy away from uncertainty.” While only 69% of men felt that ambiguous information affected their confidence, 92% of women said that their confidence in their investment decisions was affected by uncertainty.
Men are also more likely to make riskier investments than women. While one in eight men have made riskier investments looking for long-term growth, only one in forty women has done the same. According to the second poll, “Female investors were twice as likely to expect the return on stocks over the coming year to be zero or negative and to think stocks will return 5% or less per year over the next 10 years.” While some investors find this viewpoint to be pessimistic, others say it is more realistic. In fact, the Wall Street Journal offers this suggestion to married men:
“Your household’s investment portfolio will be less risky and more diversified if your wife helps manage it. She will share in what comes out of that portfolio down the road; shouldn’t she share in what goes into it? Chances are, her ideas and emotions will complement yours, and you will both end up wealthier. At least one of you will end up wiser.”
Opportunities for Women
In this day and age, it’s not uncommon for a woman to choose to remain single. Without a male counterpart to rely on (as so many women do), the single woman is left to make her own investment decisions. Even married women are opting to take more control of the family financial portfolio. So how can they learn the necessary financial skills that they need in order to make smart and safe investment decisions?
According to an article in the National Post, investment clubs can help women hone financial skills. Oftentimes, as was the case with Kristin Baker, women leave meetings with financial advisors feeling totally deflated. (As an aside, this is exactly how I felt when I left the meeting with the financial advisor at my bank, so I completely understand. It took several months before I worked up the courage to return, this time to speak with a woman.)
Women-only investor groups offer solutions that are tailored specifically to meet our needs. They offer the financial education and market information necessary for making a confident investment decision.
Investor Clubs for Women
So where are these groups?
Meet the Chicks Laying Nest Eggs, a women’s investment group that operates all over North America, including in Canada. For the most part, this investment club operates online and meets regularly each month. The group is all about becoming financially savvy; they’ve even written their own book.
If there aren’t any local investment clubs that you can join, why not start your own? Talk to local financial advisors and see if there’s an interest in learning more about money in your community. You might be surprised to see just how many women feel the same as you. It is, after all, your financial future. Why not take it into your own hands?