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Why women are better at investing than men, according to an expert

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From meme cryptocurrencies to Fintok, investing and the conversation around it has become increasingly accessible in recent years. This process of democratisation has also seen an influx of women entering the historically male-dominated space.

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According to the ASX’s recent Australian Investor Survey, women made up 45% of new investors over the last 12 months. While the onset of the COVID-19 pandemic was a significant reason behind the influx of female investors, the survey also revealed that women are more likely to take on financial advice, learn investing by practice and prioritise long-term financial security. On top of this, a rise in female-led financial advice groups and female ‘Finfluencers’ can also explain the recent gender balancing in the investment space.

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It has also been reported recently that women may be seeing greater success when investing compared to men. While research has shown that women are less confident in their investing abilities, ample evidence shows their investments perform better. For example, Fidelity’s 2021 Women and Investment survey reported that women’s portfolios performed better than men’s by 40 basis points (or 0.4%).

“Plain and simple, women who invest are those seeking to take control of their finances and use that financial freedom to chase their other life goals with a little more vigour and freedom,” said Cath Whitaker, CEO of SelfWealth, on the uptick in women investing.

According to Cath, it’s a combination of increased education and a range of social factors that lead to women’s success in the space as of late — here’s what she had to say.

What are the key traits required to be a ‘good’ investor? 

Cath noted that ‘patience’ is the critical trait needed to nail investing and that thinking about investments in a longterm manner is the way to best safeguard finances.

“That means knowing your risk profile and setting your return expectations from there,” said Cath.

“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.”

Are there particular social and psychological factors that make women better investors than men?

Cath believes the idea that women are more risk-averse than men is outdated and often sees women taking the informed, less emotional approach to investing.

“My take is that women are, contrary to mainstream thinking, less emotional traders,” explained Cath.

She also explained 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. Cath also highlighted that studies have shown women are less swayed by buying into hyped-up stocks and that women researched more, so were better at, “buying low and selling high”.

Another insight she added is that the rise of gender-minded funds and the popularity and accessibility of crypto has also encouraged women’s success in the space as of late.

“I should note that this isn’t financial advice, but one such fund is SPDR SSGA Gender Diversity Index ETF (NYSE:SHE), an ETF that invests in companies with greater gender diversity ratios. You just need to look at their stock performance to see that a gender-diverse boardroom is good for innovation and business,” said Cath. Recent reports also show that women invest more ethically than men, and are less likely to invest in entities that support the funding of fossil fuels, tobacco, gambling and other similar industries.

“We also see a lot of interest in crypto from women – which is why SelfWealth will be going live with crypto trading in a few months, making us the first Australian platform to have equities and crypto.”

“The stereotypes are that men can be hot-headed and more willing to punt large amounts on a ‘lottery stock’ recommended down at the pub,” added Cath, explaining the qualities which may make men less successful investors.

“I know there’s one Warwick University study of the FTSE 100 that came to a similar conclusion, too.”

Overall, Cath highlighted — no matter what gender you identify as — it’s important to empower yourself to make informed decisions when both putting money into investments and trading. There’s also no harm in looking into the safest ways to protect your investments too.

“In my time, just as women have become breadwinners and founders and executives, our slow step away from archaic thinking has empowered women to make strong financial decisions.”

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