Women are better investors, but they can be discouraged from starting as they don’t see themselves reflected in the male-dominated world of finance. Reweti Kohere talks to those in the investment education space trying to change that.
Women make for better investors; they show greater restraint, make fewer trades and generally hold on to stocks much longer than men.
And it works – a recent study by US financial services provider Fidelity found that its female customers outperformed men, on average, by 0.4% each year of the last decade. It might not seem like much but given you invest for the long term, it can add up to tens of thousands of dollars across several decades. Still, just one in three American women felt confident in their ability to invest, less than half (42%) felt they could save well for the long run and only 14% said they knew a lot about saving and investing.
More than half of women investors in New Zealand who use digital brokerage platform Stake think a lack of education stops them from getting started and more than two-thirds see themselves as beginners. The platform, with some 45,000 local traders among its 400,000 users worldwide, has seen the number of female sign-ups between May and November 2021 nearly double on the same period last year. But they still trail well behind the number of men joining, says Stake New Zealand’s marketing manager Bella Williams. In an effort to boost women’s participation, Stake has partnered with women-led investment education platform The Curve to provide a place for its members to put their lessons into practice.
In an introduction video on The Curve’s website, co-founder Victoria Harris describes it as a “safe space” for women to get money savvy without the “noise and confusion”. So what is it about the world of finance that makes women doubt themselves and stops them from investing? Harris tells me a scarcity of female fund managers like herself is a reason why women may feel marginalised. “Every company that I’ve worked in I’ve been the only female or the first female in my team. When that’s the industry that is controlling the money or the wealth creation, that filters down to women being under-represented.”
The “boys’ club mentality” has improved in the last decade she’s worked in the industry, she says. But their way of thinking still dominates, which doesn’t make it easier for women who are eager to learn but unsure where to turn to or whom to ask for help. “It’s nothing against men. It’s just like with anything – it’s created by them for people who are similar to them.”
Girls That Invest, another investment education platform, is showing people of colour, and women generally, that they too can be investors.
Run by best friends Simran Kaur and Sonya Gupthan, both Indian women in their mid-20s, the platform is perhaps best known for its namesake podcast that is sponsored by digital brokerage platform Sharesies and topping podcast charts in the US, Canada and New Zealand. Kaur says: “When we started off, we would refer to ourselves as millennial investors because you don’t really expect an investor to be a young, brown woman.”
She doesn’t think access to information is being limited on purpose, but women and people of colour feel as if the activity isn’t for them given the lack of diversity they see. “I remember when I first heard about investing – I was at university – and my initial thought was, ‘That’s not for me. I’m not financially savvy, I don’t have a family member that invests so no one’s there to teach me how to do it’. I dismissed it when I started uni and by the end of uni, I really had to unlearn that.”
She puts her and Gupthan’s success down to addressing an untapped market, or as Kaur describes it, “half the world’s population plus minorities and people that don’t really associate with being a white, well-off man”. She says: “We’ve never felt like that’s a world we can enter.” One example is the misconception of needing a lot of money to start investing. A wahine Māori in her 40s shared with the pair her experience of being told she needed $10,000 “or this is not the industry for you”.
It’s a powerful statement to make to someone getting started, says Kaur, who then dispels it by explaining another way of investing using fractional shares – if one share costs $1,000, people can pay $10, receive 0.01% of that share and still see a rise or fall in value. “The barrier to entry is so much lower than it used to be, but people still have a lot of fear because of experiences that we hear about from people older than us,” she says.
The Curve’s Harris says women take a more considered approach once they’ve started. “We do our research, we make sure that we know what we’re investing in, we also don’t make irrational decisions, we don’t get emotionally involved… we don’t feel like we need to be buying and selling and constantly doing something.”
But this aversion to risk means their money is more often kept in a low-risk, low-return asset like cash. Because women live longer and earn less than men, they are reaching retirement potentially already lagging behind because they didn’t take the risk decades earlier of building their wealth and ensuring financial independence should they outlive their male spouse (women in same-sex relationships can take comfort in not having to worry about this). Reaching them well before superannuation kicks in is critical.
Kaur describes women as more “risk-aware”. Once they learn about the different risk profiles of various assets, like bonds (less risky) or cryptocurrencies (riskier), women will choose their level of exposure accordingly. “We just need to know what the options are and have them presented in a way that’s comfortable and it feels like we’re not [being] spoken down to, we’re just being spoken to. That’s really what it takes.”
Closing the gender investment gap is simply the goal, says Williams. “It’s to get more women in the market, more women getting financial freedom and building their wealth.”
It pays dividends for them, after all.