Women and investing: What’s the deal?

Women and investing: What’s the deal?

Women have been at the forefront of many achievements today. Be it the corporate world, the education sector, the entertainment industry or even the household ministry (running a house is nothing less than running a government department). But despite these numerous achievements, women still get a raw deal when it comes to gender equality. Irrespective of the numerous initiatives companies take, women still tend to face the glass-ceiling effect. They are, at times, even considered to be a secondary choice when it comes to earning promotions in an organization, becoming the president of a nation or working for challenging roles in the defense sector. Thankfully, there is a general sense of consciousness today to eliminate all kinds of gender bias and we can only hope and continue working towards achieving a fair society.

The gender bias is not limited to these aspects but is visible in other areas as well. An example of this is the popular belief that ‘women are not good investors’. But to the dismay of the so-called believers, studies claim that women are not only good investors but can even be termed to be better in the game. Let’s take a look at female investing patterns in Singapore and what lessons we can learn from them.

Why are women better investors?

One of the reasons why women are termed as bad investors is because people think that they joined the game too late, saved too little, and invested too conservatively.  But a growing number of surveys and research papers suggest this stereotype is false. A study titled ‘The Gender Face-Off: Do Females come out on Top in terms of Trading Performance?’, found that females tend to have a better ability in the ‘theory of mind’ and are hence better at analysing data and recognizing patterns with superior trading intuition.

Women spend more time researching on trading patterns than men, and this gives them an edge in what they do. They do a good job when it comes matching their financial goals with their life goals. So they could seem to trade less compared to men but when they do, they are calm and unnerved while dealing with the volatility of their investment options.

Study

The study which was conducted over a period of 17 years, observing the audience in Finland, also found that women individual investors outperformed domestic and international institutional investors. The authors of the study concluded that female investors prefer buying underpriced stocks and selling overpriced stocks.

Another study conducted by the University of California titled “Boys will be boys: Gender, over-confidence, and common stock investment” stated that women investors outperformed male investors by one percentage point every year.

These results have been consistent even during times of market buoyancy and decline, thus disproving all critics who term women’s investing patterns to be faulty.

Before we get down to listing financial advice for newbie women investors, here are a few things you should know.

Why should women invest?

While the focus of this article is to understand successful investing patterns by women, it is important to take a look at why money management is necessary for women.

Female illnesses

Women are prone to certain medical conditions like breast cancer, cervical cancer, and musculo-skeletal problems. And to deal with these illnesses, you will require additional funds and a good insurance coverage. You should be able to identify the best health insurance policy based on your needs.

Higher Divorce rates

Recent statistics are proof of the growing divorce rates in Singapore. And divorce and separation tends to pose a major financial risk to women. Things get even more serious if you have to look after dependable children. So, it is imperative that women are financially independent at all time. You should be armed with income from various investments even when you are not in a position to work (e.g. during maternity)

With this background, let’s see what we can learn from successful women investors in Singapore.

Lessons for amateur women investors

Pay attention to asset allocation

As an investor, whether male or female, one of the most important decisions you will make is about asset allocation. First get an understanding of your short-term and long-term goals, and then decide on how you want to allocate your resources to each investment option in your profile. The way you allocate your funds to stocks, bonds, mutual funds, and real estate will determine your investment outcomes.

Save habitually

• Irrespective of how tempted you might be to buy that Chanel bag, give it up if you are planning to start investing. Make saving a habit and stick to spending the remaining amount you have. Even if you cannot start investing right away, reserve a portion of your salary every month. Eventually, you will be able to save enough to start investing.

Arm yourself with investment news

When you are new to the game, you have no choice but to keep reading and asking investment gurus about various investment options. And come what may, never invest blindly. Make sure all your investment decisions are based on reliable information.

Has this information made you financially conscious? Let us know your thoughts in the comments section below.

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