There is still a lot to explore about how women view and address their finances, including the obstacles that come their way and incentives that would encourage them to take action.
Women today are outpacing men in so many areas, including pay parity which doesn’t look like a distant dream now. However, quite a different narrative exists when we talk about women investing. Numerous studies have proved that women are not just reluctant at investing, but even significantly less aggressive than men. On the face of it, this should rather not be gender agnostic because investing doesn’t involve physical efforts or any other considered limitations for women.
A major reason behind this ultimate gap is perhaps rooted into the societal mores wherein men provide for and women nurtures. There is still a lot to explore about how women view and address their finances, including the obstacles that come their way and incentives that would encourage them to take action.
Why do we not see women taking active interest in investing?
Financial independence is a matter of necessity for women. There are several reasons behind the investment gap between men and women.
1. Pay Gap
Though there has been a drastic improvement in the gender pay disparity over the recent years, but a lot still needs to be done to attain a balance. Pay gap may be one of the reasons for women to be interested in investing with lesser income but also, shall not be considered as a reason enough for not investing at all.
2. Priority to savings and fixed return instruments
Whenever asked about investments, women’s preferred choice is fixed return instruments. Women have taken risks and succeeded in other areas of life, but where it comes to money, they are extremely conservative. While they might consider investing at a later stage in life, missing out on potential years of high returns puts them at a financial disadvantage.
3. Lack of Assistance
Usually, women tend to easily get affected by the horror stories around risks of investments than men. This is largely because of lack of knowledge and awareness about investments. Of course, not all investments have high risk; with awareness on your risk appetite and risk management, you can reap brilliant returns.
Investment Tips for Women
Reckoning investments, if made strategically and early, can help women have a secure future for themselves and their family. Here are a few investment tips:
# Educate yourself
A journey of thousand miles begins with a single step. Try and learn about the financial instruments as much as possible. There are so many apps, workshops, blogs available online and offline, all free of cost. Educating yourself first is the best way to go about the things.
# Strategizing the investments
There are several gender specific variables that women investors must consider while planning their investments. An effective, women-friendly investment decision would consider factors such as pay disparity, longer life expectancy than men to have an effective plan to yield the expected returns.
# Invest early
Many studies have shown that women live longer than men and long life means need of more money for your and your family’s survival. This need cannot be fulfilled by savings alone. Therefore, investment decision at an early stage is perhaps the most wise decision for a safe future.
# Evaluate well and diversify your portfolio
While women are willing to invest in long-term instruments, in order to improve their portfolio performance, it is equally important for them to take some risk and get over “I can only invest in principal guaranteed (low-return) products”. You can start by ensuring that you diversify your portfolio and spread out the risk by not keeping it focused at one place.
Women should give their personal financial life the attention that it requires. You may also consider taking help from financial planners to successfully evaluate around different aspects of a financial plan.
There is no legitimate reason that women should invest less frequently than men. If you are new to investment, there are financial advisors available out there to assist. There are numerous investment options available with something to suit everyone. Remember, opting not to invest due to any reason is never a wise decision. Financial future is as important as anything in your present – so start and prioritize now.
(By Jashan Arora, Director, Master Capital Services Ltd)