Eight Advantages That Make Women Great Investors
Eight advantages that make women great investors
This post was first posted on November 13, 2014
"You throw like a girl!"
It's the mantra of every brash schoolboy on the playground. From an early age, the battle of the sexes is kindled. Later in life, the prejudices come in more subtle forms, such as pay gaps and glass ceilings.
Mostly, these are workplace problems, the struggle of the female employee. I've been a proponent for years of entrepreneurship as the path to social change when it comes to issues women face in the workplace (see " The Nobility of Women Entrepreneurship ").
But it's also fair to acknowledge that women also face tougher roads even in entrepreneurship, especially in the tech fields where the majority of venture capital money goes to men. (I've also talked about how women can go around the system to fund their startups. See " Five Innovative Ways to Fund Your Business ".)
For these reasons and more, it's been the mission of Rich Woman to empower ladies to be financially educated and free. To me, there's no better way to do this than through investing. As I wrote in a post called " Why Women Must Become Investors ": "Most women are not prepared to financially thrive on their own. But times have changed, and it is not enough to rely on others-a man, family, or a business or government-to take care of us."
Well, there's good news on that front, ladies! When it comes to investing, women are generally better equipped than men to succeed. In fact, the old school taunt, "You throw like a girl!" has evolved into a compliment: "You invest like a girl!"
As The Sydney Morning Herald writes in an article called " Warren Buffett Invests Like a Girl: why women are investment naturals ":
Warren Buffett is like the Don Bradman of investing - he is arguably the best ever long-term investor. To say that he invests like a girl is somewhat controversial, but the book of this name posits that many of the attributes which make him so successful are natural to women…The book's author, LouAnn Lofton, suggests that it's all about controlling your emotions. "Buffett has always said that it's temperament - not intellect - that makes you a great long-term investor. When you look at studies about how men and women invest, what you see is that women tend to naturally have this temperament that creates long-term investing success."
The article goes on to give some good examples of how women invest wisely, matching Buffett's own investing style. It's worth a read.
Here's my eight ways of how to invest like a girl. They are the advantages that make women great investors.
1. We're not afraid to say, "I don't know."
The person who has to know all the answers, who's afraid of looking stupid, never learns or grows. Women, in general, are more willing than men to ask questions and admit when we don't understand something. The advantage we women have in being confident to say, "I don't know," is that it opens up the doors for us to learn so many things. It's one of the most powerful tools we have.
2. We're willing to ask for help
I visited my friends Marie and Carl a while back and they had a plumbing problem. Marie's first instinct was to call a plumber, but Carl was adamant that he could fix the problem himself. A couple hours later, Carl emerged from the bathroom looking frustrated and defeated. "Let's call the plumber," he said, begrudgingly.
When the plumber came, he ended up replacing the entire toilet. Turns out the original problem was a small piece that would have taken a few minutes, but Carl's efforts made that small problem a much larger one!
Had they just followed Marie's advice to ask for help, they would have saved a lot of money, time, and frustration!
3. We're great shoppers
Some stereotypes are true…women are great shoppers. Why does this matter when it comes to investing? Because we know how to find a great deal! The formula for bargain shopping is the same for investing-look for something that is priced below its actual value and buy it.
4. We do our homework
Women don't usually buy off the "hot tip." We do our homework. According to the National Center for Women and Retirement Research (NCWRR), women spend more time researching their investment choices than men do.
5. We are risk-averse
Many studies have shown women to be "risk-averse" as compared to men. Some think this is a bad thing, but I think it can be used for a lot of good. Whenever I venture into an investment that I feel is a bit more risky or unfamiliar, I tend to study it a little bit more than usual and do my homework, which leads to greater success as an investor. Of course, this can also lead to analysis paralysis, so women need to watch out for that!
6. We have much less ego
Generally, women have much less ego when it comes to their investments. My girlfriend investors tend to be very practical, matter-of-fact, and very conscious of the return on their investments. It's no secret men can tend to display a bit (or is it a lot?) of ego and bravado when showing off their investments. The only thing my girlfriends want to show is the money.
7. We are nurturers
Women tend to nurture their investments. For instance, I have a friend who told me about her apartment investment the other day. She talked proudly about how she had fixed up the building and improved the look and feel of the property. She mentioned the wonderful tenants she had and told me that she made it a point to meet each one of them. She took care of her property and her tenants. She nurtured them. In return, her tenants recommended her property. She now has a wait list, and her rents are comparably high.
8. We learn well from other women
Women love to share what they are learning with each other. If they find something that works, they want to share it with their friends. This may be why the women-only investment clubs out-perform the all-men clubs. Women typically want their friends to succeed.