This will come as a surprise to few, but women are less likely to invest than men. Indeed, a survey, conducted by YouGov Omnibus, found that over half (52%) of UK women have never owned any investments, compared to 37% of men1. And in total, only one in five women hold investments, against a third of men1. And yet, when women do invest, they tend to do well, in many cases beating their male counterparts. A recent study, led by Warwick Business School, concluded that women outperformed the FTSE 100 by 1.94%, and men by 1.8 %2. So, what’s their secret? And what can we learn from women in terms of investing? Here are three things female investors do that could help your investment journey.
Remain invested over the long-term
When women invest, they tend to think long-term and approach the whole thing with a ‘buy-and-hold’ mindset. In other words, they buy investments and keep them for a number of years, regardless of market movements. On the other hand, men are more likely to show impatience. Evidence shows that men are 35% more likely to buy/sell shares than women – needless to say, they’re not saving money on trading fees3! So, if you want to maximise your returns, it could be wise to adopt a more feminine approach and commit long-term. Not only will you save money on fees, but you’ll also increase the odds of seeing positive returns. In fact, people who invested in the FTSE 100 and remained invested for any 10-year period between 1986 and August 2019, have had an 89% chance of making a gain4.
Make sure to do your research
Evidence suggests that women aren’t very confident when it comes to investing. When asked to rate how confident they are in choosing an investment account, fewer than a third (32%) of women rated themselves 6 or above out of 10 for confidence5. This can sound like a bad thing – after all, this means that women aren’t investing because of confidence issues. But on the brighter side, this also means that women are more likely to do their research when they decide to start their investment journey. And this is something every investor could learn from! Whether you’re just getting started or have some experience in the investment world, it’s important to research countries, sectors, and companies worth investing in. There’s no denying that this can be time-consuming since you’ll need to analyse balance sheets and keep a constant eye on the news. But doing your homework is the only way you’ll be able to make informed investing decisions. If you’re too busy to do the research, don’t worry, there are many digital investment services, like Wealthify, that’ll do the hard work for you, from picking your investments to managing your investment Plan on an ongoing basis.
Try to diversify your portfolio
Something women do well is diversifying their portfolio3. What does it mean, you ask? Well, instead of buying just one or two shares and running the risk of losing everything, women are more likely to spread their money across investment types and regions by purchasing funds. Funds are like hampers which contain a large number of investments from markets across the globe, and they’re an easy way to mitigate risk – something to consider when you start investing!
Stay calm and keep your investment goals in mind
When markets go down, women are more likely to keep calm while men tend to act more emotionally. For example, investment platform, Vanguard analysed retirement accounts of 2.7 million of its customers during the Global Financial Crisis in 2008 and 2009 to see how investors reacted to the downturns. And the results are striking! Women were more likely than men to remain calm and invested. Meanwhile, men were more prone to react and sell their shares and make losses6. There is a key learning here. Whenever markets drop, it’s important to keep your nerve and resist the urge to panic sell. Instead, try to hold on to your investments and remain focused on your long-term goals. That way, you won’t miss any potential market growth and you may even be able to grab cheap investments.
The idea that women aren’t good at investing is a myth. They’re doing just as well - if not better - than men. So, if you want to make the most of your investment journey, it could be a good idea to start thinking like a girl.
4: Data from Bloomberg
Please remember the value of your investments can go down as well as up, and you could get back less than invested.