Kylie Purcell, the Investments Editor at Finder, explains why don’t more women invest?
Did you know that in the UK more investment funds are managed by people called Dave than by women?
While it’s not everybody’s dream to be a fund manager, that trend resonates through to almost every aspect of investing, from superannuation to share trading. Men dominate both financially and in participation numbers.
But here’s the bit that men don’t always dominate in – the art of investing.
Though just 18% of online investors in Australia are women (according to a recent Investment Trends report), numerous studies show that women generally outperform men when it comes to share trading.
That’s right, they may not be as noisy about it, but they pick good quality stocks and they tend to make smarter investment decisions.
In one famous UNSW study looking at Finnish share traders over a period of 17 years, women were found to have superior trading intuition, were better at reading share price patterns and made more money on average from stocks than their male counterparts.
So what’s stopping us?
Unfortunately, it comes down to the same factors we see in all aspects of money making. And it’s the same reasons girls tend to dominate at school but still end up with lower salaries on average in the workforce.
While it’s a lot more complex than simply blaming the pay gap, the truth is:
For many women raising families – some who will have taken time off from work to do so – investing in stocks will seem like too big a risk to take and too time-consuming to get involved in.
This isn’t irrational thinking. But thing is, while the stock market can be risky, history has proven it to be one of the best investments you can make (just ask your superfund provider) over a long time frame.
How to get started investing
Once upon a time, if you wanted to invest in the share market you needed to call your stock broker and place a trade. Brokerage fees were upwards of $100 and there was normally a minimum investment of several thousand dollars per trade.
This meant that share trading was mostly inaccessible to everyday Australians a couple of decades ago.
Thankfully, these days you have the option of using an online share trading app with brokerage fees typically starting from around $10–$30 a trade with a minimum investment of just a few hundred dollars or less.
With share trading platforms you can start buying shares with the click of a button. If you get started early you have the opportunity to build yourself a nice stock portfolio for that (fingers crossed) early retirement.
Here are a few tips:
At the risk of stereotyping, I believe one of the main reasons very few women invest is because they’re more wary about making mistakes.
I spoke recently to NAB’s director of investor behaviour Gemma Dale about men’s and women’s investment habits on the nabtrade share trading platform.
She said that although there are still far fewer female investors than male, young women aged between 18 and 25 tend to have bigger investment portfolios than men of the same age group because they invest for the long term and are less likely to lose money through poor trading decisions.
Meanwhile, their male counterparts make a lot of mistakes, tend to make riskier moves and often end up losing more times than they profit.
This awesome ability to make sensible trading decisions is why women are so great at investing, but I think that drive to get it right all the time is also partly the reason so few women are getting into it.
According to Dale, by the time men and women reach their 30s, men start to outpace women in terms of portfolio size as they begin learning from their mistakes and make smarter decisions themselves.
The lesson being that investing isn’t necessarily about being the most skilled, it’s about being in it in the first place.
Kylie Purcell is the Investments Editor at Finder