Saturday, October 11, 2014

Why more women should invest in the stock market (Part One)

When I first became interested in the stock market and learning how to invest (over 10 years ago!) one thing that became very clear to me from the beginning is that many of my fellow ladies did not share my same enthusiasm. Fast forward a few years later when I actually started to invest and attempted to share insights with friends I realized that the majority of the people that wanted to have a conversation about it where male. While many of my female friends seemed interested up to a certain level; I got the impression that fear was preventing the majority from making the leap from talking about it to actually taking action (I was one of those people!).

I have shared many times on the blog (and in the 'about me' section) that if it wasn't for a former male co-worker teaching me how to invest in individual stocks, step by step, and assuring me how the majority of my fears were unfounded-- I probably would have never gotten started. Or would have started a lot later than I actually did.

This is the ironic part: There are tons of studies out there showing that women make better investors than their counterparts for  several reasons. A couple of the reasons that are brought up the most are:

1. Women have more patience when it comes to investing and don't overreact as often (read: less testosterone)
2. Women are more risk averse.

(...hey guys, don't get offended, just citing the evidence, evidence, evidence).

In other words, females have less of a tendency to panic when facing the inevitable ups and downs of the market and therefore, hold their investments for the long term, saving in trading fees and financial expenses of the sort. Women are also more analytical by nature when it comes to the investments that they make and are more skeptical when it comes to investing in complex securities that do not make any sense (one of the main reason for the financial crisis). Women invest in what they can understand and what they are familiar with rather than jumping head first in to the unknown {not saying all males do it. This is simply an example}.

I know this can turn in to a controversial topic and I am not one to point any fingers and/or make generic statements on the matter. I know everyone is different, regardless of gender, and one's ability and propensity to invest depends on a multiple number of factors. But nonetheless, as I eagerly researched the reasons why there is such scarcity of women in the stock market, I found that fear seemed to be a common theme. Hence, what I am trying to bring across with this post is that the majority of those fears do not have a basis and thus, I would love to see more women participating in the world of individual stock investing. I am making it my mission to encourage this (more to come on that).

To put things in to perspective, studies show that only 25% of women feel confident enough to manage their own stock market investing. That means that a staggering 75% would rather not get involved at all or give the task to someone else.  And this is whats more interesting-- women are known as the "Chief Purchasing Officers" of the home. Often in charge of making the ultimate decision of where and how to spend the money that comes in. If women only knew that they could make a nice sum of money simply by applying those 'strategic purchasing decisions' to their brokerage accounts, we would see a lot more involvement.

Women are often  the first to know what is popular and what is on style when it comes to retail, accessories, brands; they know which products are worth a splurge and which can easily become a substitute, they know which items they purchase consistently or "cant live without", and which they only buy when the economy is "good"-- all factors that can become significantly important when it comes to affecting the bottom line of any publicly traded company.

As a general example--a women that is "in the know" when it comes to brands and style could have probably been quite valuable in identifying when the shift in brand preference began to transfer between the Coach brand to Michael Kors, about 2 years ago and could probably identify when this trend begins to shift again to either another brand or something else.

In part 2 of this post, I want to give some practical tips for 'skeptical' women on how they can get started with minimal risk and limited funds. Invite your girlfriend, wife, mother, sister, friend, neighbor, every female you know to read these post and get excited about the wonderful world of investing. I'll also share another post on popular brands who make a fortune thanks to the female consumer. Why should men be the only ones making the profit from the stuff women buy?! We should all benefit.

What are your thoughts regarding women and investing?

Thank you for reading.

...and as always cheers to profits!