May 5, 2022
Elizabeth Tsikanovski
KiwiSaver
All Blogs

Why are women better investors?

When it comes to money, women consistently receive different education and messaging throughout our lifetimes with the outcome that many people, including women themselves, believe men are better at managing their money and making financial decisions.

The truth is that women often make better decisions and outperform men when it comes to investing.

So, before we dive into what women do differently, let’s start with what makes a good investor in the first place?

What makes a good investor?

There are many books, podcasts, lists and more which will tell you how to be a great investor, but when it comes to your average time-poor individual wanting to start investing there are three key considerations:

• Know what you’re trying to achieve – are you having fun or working towards a specific goal?

• Know where your money is going – whether you are passionate about investing ethically or not, knowing where your money is going is always relevant when the market shifts

• Diversify! Look at spreading your money across a range of asset classes, industries and geographical regions. This is where some expert advice can start to help you out.


Knowing that a sense of purpose, awareness of where your money is going and some diversifications are key aspects to investing, what is it that women do differently? What is the secret to our success?

Why are women good at investing?

Women tend to be calculated risk takers, researching their decisions and investment options more before making a move. Having done sufficient research, women then tend to trade less, incurring fewer fees and allowing the market to work its magic. Men tend to feel the need to trade more often and within that are often overestimating their ability to pick high performing investments. This not only means that they incur more transactional fees but also that they are trying to actively manage their investment rather than allowing it to passively grow. Building on the fact that women are comfortable leaving their investment to grow once they have chosen it is the fact that women also appear to stay calmer during market downturns and are therefore less likely to lock in their losses by shifting their funds when there is a drop.

Why do women have less at retirement then?

The tricky reality is though, that despite the studies showing that women outperform men by around 0.4% per year, we know that when women get to retirement they often have less available to them. This is part of what we call the Gender Wealth Gap, and we are only just starting to collect comprehensive data on what this looks like in New Zealand, but is a natural progression from the gender pay gap which most people are familiar with.

Women receive lower pay throughout their careers, take more time off or work part time, are subject to the pink tax and if it weren’t enough that we have genuinely less income available to them to invest, we have also spent our lives being told to avoid risk, far more than men ever are.

All of this means that although women often outperform men when they do invest, they are less likely to invest in the first place, having been conditioned to not take risks and believe that they are not as good at financial decisions. They are also likely to have less surplus available to invest if they do decide to get in the market.

Start simple, but start.

For anyone, who isn’t already in KiwiSaver, make sure to set yourself up and start contributing - this could be the first step to getting in the market, getting some advice and getting a sense of how you respond to market volatility. Beyond that, the best thing you can do is find a financial adviser you like and trust to help you get your head around your finances. This person should be able to demystify the jargon, take on board your existing relationship with money, your financial literacy and what you’re trying to achieve.


We’d love to help you make a plan and get in the game, knowing that chances are you will outperform not only the men but your own expectations!

Elizabeth.

Elizabeth

 

Disclaimer: Elizabeth Tsikanovski (FSP693611) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Elizabeth’s disclosure statement on our website. 

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