Women investors a force of nature

March 2023

A recent report by CNBC states that women could become a force to be reckoned with in the post pandemic investment world if supported sufficiently.

According to Fidelity’s 2021 Women and Investing Study, women investors outperform men by an average of 0.4% in terms of investment returns, while the same report shows that only one-third of the women surveyed see themselves as investors. As Meghan Railey, Co-Founder and CFO of Optas Capital notes, women naturally possess certain characteristics that make them both savvy savers and intuitive investors. Some of the traits observed by Railey include:

Thoughtfulness and Discipline: Women generally tend to take their time to explore investment opportunities and stay with them longer. This mindset of wanting to research more about an investment instead of following the crowd lets women investors remain level-headed and not be sucked into the latest investment fad. Knowing more about an investment allows for strong staying power to see the investment to fruition.

Curiosity and interest: Women are also more curious and engaged in learning about the “how’s” and “why’s” of investing. They take a keen interest in understanding the investment selection and management processes to make informed, confident and relatively stress-free decisions. Women tend to be more detail-oriented and better at deep-diving into subjects, while men are generally better at the big picture and may miss out on the fine pr+int.

Trust in people and process: Women investors tend not to overthink about strategies like men can. Often, women will research conscientiously but stick to their plans once implemented.

Openness to advice and collaboration: A lower ego and greater trust in people also helps women investors seek and follow expert opinions to achieve better returns.

Hence, women who have a keen interest in investing ought to have greater confidence in their ability and start taking the interest more seriously. They could open their own investment funds, set up a business to do investments, or even start a fund management firm to manage assets in a more proactive and professional way, for others, even if it were just for themselves.

They could even set up funds to specially cater to other women who may lack the time, interest nor expertise to do their own investments. This way, they could empower other women to take charge of their finances.

Women Have A Less Positive View of Their Financial Future

In a 2020 survey conducted by the Transamerica Center for Retirement Studies, 60% of women said they are concerned about outliving their savings, compared to 45% of men, while a similar survey conducted across 11 countries by the S&P Global in 2019 showed that a high proportion of women globally rated their personal financial situation as being only “fair” or “poor”, with 73% of Swiss women surveyed rating their personal financial situation as being “poor”.

In both the U.S. and Canada, fewer proportions of women feel they are in “excellent” or “good” financial shape than their male counterparts. If faced with a financial setback like unemployment, 22% of American women say they would be immediately unable to afford their current lifestyle, as compared with only 13% of men.

Thus, women do need to start investing to improve their financial outlook instead of relying solely on a wage.

Not Lacking Savings, but Lacking Confidence to Grow Their Savings

It is a misconception that women do not have the resources to start investing. Women have proven to be able to save up rather well. What they lack is a proactive approach to making their saved up money work for them.

In the 2021 Fidelity study, 67% of women surveyed said they have savings beyond their retirement accounts, up from 44% in 2018. Nearly 50% of these women have saved $20,000 or more in emergency funds, with 20% saving $100,000 or more, outside of their retirement accounts. While they are good savers, only 26% of the women surveyed reveal that they invest in the stock market even when they view the market positively. This inertia to act is the achilles heel holding the women population back.

However, the tide is beginning to shift in favor of women having a greater voice in a married couple’s investment decisions as the proportion of working married women contributing to household savings increases. According to McKinsey & Company, Western European women investors now control roughly a third of total assets under management (AUM), valued at some €4.6 trillion, partly because of the rising number of married women taking responsibility for household financial decisions. The firm expects the women’s share of investments to reach 45% of AUM and a total of €10 trillion by 2030. Thus, the addressable market for specialised made-for-women, run-by-women investment funds have huge potential for growth as more women wake up to the idea of managing their own, or even their family’s finances.

Having more women play an active role in the world of investing could give other women greater confidence to start their own journey towards the betterment of their financial objectives and empower the women population even more. Wouldn’t you like to be one of the leading experts in this field to inspire and help others?

We understand that the beginnings of any investment venture can be daunting, especially for the women investor. At coinvesting, we are happy to help navigate the nits and grits and work with you towards getting an investment fund started up.

Holding a DIFC Category 3C Fund Management Licence and having experts with more than 20 years of experience in fund management, Coinvesting will actively seek out women-led startups and pays particular attention to capital allocations made by women.