5 Ways Women Invest Differently From Men (Women’s Week Special)
Studies have shown that there are significant differences between how women and men invest. Neither investment approach is necessarily better, but it is always good to be aware of our gender-specific biases so that we can make better investment decisions.
Here are the differences in investment approaches:
1. Women tend to invest more conservatively than men
A 2020 OCBC financial wellness study on Singaporeans found that 27% of women are satisfied with a low return investment of 0-3% per annum so long as they are guaranteed of not suffering a financial loss. For men, the corresponding figure was 22%.
Conversely, only 6% of women were willing to achieve a higher rate of investment of above 6% per annum when it was accompanied by a risk of loss, compared to 15% of men.
No wonder that an earlier study from BlackRock found that women tend to hold more conservative assets like cash in fixed deposit accounts and insurance-linked investments than men.
Whilst there is nothing wrong in having a low-risk appetite, given the current low interest rate environment, conservative assets are unlikely to grow our nest egg significantly. So women might have to overcome their natural risk-averse disposition to invest in higher return assets to grow our funds.
2. Women have the potential to develop more confidence in investing
The OCBC study found that 28% of women believe that they are confident and knowledgeable about investing, compared to 48% of men.
Yes, men tend to exude more confidence about investing, but it’s important to remember they do not always get it right. Indeed, the same study found that the women who were confident and knowledgeable about their investing abilities have a better investment performance than men.
So girls, it’s time to lean in and grow our knowledge in investing!
3. Women do more research before investing
The OCBC study also points out that 52% of women who were confident and knowledgeable about investing did their own research before investing, compared to 37% of men.
Our natural lower risk appetite might be the reason for this, as we are more cautious before plunging into an investment. This is a good thing, so long as we do not allow ourselves to suffer from analysis paralysis. In the end, we must make decisions on how to grow our money and not leave it languishing in low interest savings or fixed deposit accounts.
4. Women are more willing to receive advice from family and friends
The Blackrock study above found that 47 per cent of women tend to seek advice from family and friends when making long-term savings and investment decisions, compared with 39 per cent of men.
We’re generally better listeners than men, and we’re willing to admit what we don’t know, so it’s no wonder that we seek advice from friends and family. But we need to make sure that we’re getting good advice, so thank goodness for our disposition for the final trait below.
5. Women are more willing consult financial advisers
The Blackrock study found that women were more willing to consult financial advisers than men.
This is a great thing. Openness to professional advice widens our financial knowledge, gets us comfortable with higher return/higher risks investments, and gets a third party to look objectively at our financial situation.
Let’s just make sure we get unbiased independent advice from licensed financial planners. If you are looking for one, consult the Financial Planning Association of Malaysia’s SmartFinance website. Or view some of our webinars and seek out licensed financial planners who suit you.
Happy Women’s Day!
The Women@Fi Life
P. S. If you’re a man, please share this article to all the women in your life and wish them Happy Women’s Week!