We all know the stereotype — the finance bro mansplaining what crypto is and why you’re a darn fool if you’ve yet to get in on it.
But alas, according to various studies, our much-maligned crypto-bro pals may not be the cream of the crop when it comes to investing. Instead, research has shown that women are actually heaps better at investing than men.
According to investing podcast You’re In Good Company, only 18% of active online investors in Australia are women. However, research from UNSW that analysed 17 years’ worth of investment trading found that women make better investors than men.
This report from Forbes also suggests that women may be seeing greater success when investing compared to men, despite having less confidence in their investing abilities, and Fidelity’s 2021 Women and Investment survey reported that women’s portfolios performed better than men’s by 40 basis points (or 0.4%).
To explore this trend, we spoke to Mandy Drake, the Chief Financial Officer, and Cath Whitaker, CEO at SelfWealth — a platform that makes it easy to get your investing journey started, that also happens to have two women at the helm.
Here’s what they had to say.
What common traits do women show when it comes to managing money?
Drake noted a few key differences in the way different genders approach investing.
“Women tend to be more calculated in their investment risk,” she said. “But the phrase here is ‘risk conscious’, not ‘risk averse’, because no investment is risk-free. Instead, women opt for a rational, long-term approach.”
Professor Peter Swan, who co-authored the UNSW study, said, “Women are far more likely to buy when prices have fallen, indicating greater scepticism and contrarian behaviour than males. Female investors prefer to buy underpriced stocks and sell overpriced stocks – compared with moving average prices. It’s an investment strategy that, over the long term, pays off.”
Overall, women generally show more patience in the space — which Whitaker noted is the critical trait needed to nail investing, and that thinking about investments in a long-term manner is the way to best safeguard finances.
“That means knowing your risk profile and setting your return expectations from there,” said Whitaker.
“Sure, some people might get lucky picking stocks, but the safest way to invest successfully is adding to your investment base regularly and investing in a mix of asset types, especially index ETFs. Investing is about using what you have today to make a better tomorrow.”
How do women tend to approach investing?
“My take is that women are, contrary to mainstream thinking, less emotional traders,” explained Whitaker. She also added that women are more likely to set up solid investment plans and have clear goals in mind that allow them to roll with hiccups along the way rather than panic.
“Emotional investors seldom win in the long term. It’s important for investors to do their research, think about the long term and stay level-headed when it comes to the small losses along the way,” added Drake.
There’s also a bunch of evidence suggesting men take more risks than women in all aspects of life — which also translates to the world of investing. So, once women are in the market, they’re more likely to make safer choices and support for the future, and not gamble their hard-earned cash in a volatile bull market.
“I think the reason women do this less comes back to research. Women research more, and the research says investing is a game in which you score higher the longer you play,” says Drake.
Well, there you have it, folks. The girlies are dominating in yet another field (as expected), and if you’re inspired to kick off your own investing journey, you can suss out SelfWealth to get started.
