Women and Money
Think about a recent business or social event you enjoyed. Do you naturally gravitate towards the company and conversation of other women?
I love the vibe of an all-female group, whether that’s friends, family, or colleagues.
Is gender relevant?
You may feel the gender of your financial adviser is irrelevant. Professional people should have the skills and qualifications to do their job well.
I belong to a supportive group of financial adviser colleagues who echo my own viewpoint: women often feel more comfortable discussing their financial goals with a female adviser. This is especially true when dealing with sensitive issues, such as ill health, divorce, and bereavement.
Throughout history, women have faced unique barriers. We’ve battled gender biases, pay disparities, and paternalism. As a female adviser, I relate to my female clients’ experiences and challenges. I’m mindful that caregiving responsibilities and longer life expectancies have an impact on them. Personal experience gives me valuable insight.
Do women make decisions differently?
Dr Ylva Baeckstrom’s study (2022) uncovers a crucial aspect of how women make financial decisions. The research shows that women tend to prioritise long-term goals. Overall, we’re generally more cautious when it comes to taking risks compared to men. Unsurprisingly, women often base their investment decisions on their values. Many of my female clients consider environmental sustainability and social responsibility important.
We often get caught up in the hustle and bustle of life, leaving us with little time to concentrate on our financial stability. However, it’s essential to realise that investing in our financial future is crucial. Whether you’re a beginner or an experienced investor, my blogs are designed to help you navigate the world of finance.
Addressing unique challenges and opportunities
I’ve touched on some key differences between male and female investors. Let’s look more closely at these:
Risk
Women tend to be more risk-averse than men. Longer life expectancy and the desire for stability and security for our children are two possible reasons for this difference.
I often advise women who are concerned about risk. They want to make sure that their investments are safe and that they won’t lose everything. I understand their concerns. After all, no one wants to waste money. However, it’s important to remember that risk and reward go together. The more risk you take, the greater the potential reward.
But it’s essential to find a balance between risk and reward that’s right for you. If you’re uncomfortable with taking on a lot of risk, focus on investments considered “safer.”
Remember that risk can be managed. You can use several strategies to reduce risk, such as diversification and asset allocation. If you’re concerned about investment risk, expert advice is essential.
Goals
Women’s investment goals are often different from men’s. In my experience, women are more likely than men to invest for the long term. This takes advantage of compound interest to grow wealth over time.
There are a few reasons why women may be more likely to invest long-term. You can read more about this in my Mind the Pay Gap blog. Women tend to live longer than men, so they must save more for retirement. Women are also more likely to be the primary caregivers for children and elderly parents. This means they may need to plan for shorter-term financial goals, such as children’s further education or a down payment on a house.
If you want to invest for the long term, there are a few things you can do.
- Set aside a regular amount of money each month to invest.
- Don’t panic when the market takes a downturn. Remember, the long-term goal is to grow your wealth. Don’t let an emotional response allow short-term fluctuations to derail your plans. More about this later…
- Choose investments appropriate for your risk tolerance and time horizon.
Emotions
Emotional pressure can lead to impulsive decisions that are not in your best financial interests. Women are more likely to have a caring role, so we may be more likely to make decisions based on our emotions, including fear and worry about our responsibilities. We can be influenced by social pressure too.
For any investment decisions, be aware of how your emotions influence your choices. Managing our natural inclination to avoid discomfort is a key skill your financial adviser brings to your relationship.
Role modelling and breaking barriers
Early in my career, I realised that choosing to work with a female adviser can make a profound difference. The adviser/client relationship is paramount – it should feel completely comfortable and stress-free.
Only some of us have a brain (like mine!) that thrives on numbers. I understand that women may feel intimidated by the complexities of financial planning and investing. My expertise lies in breaking down complex concepts into bite-sized, easy-to-understand pieces.
Countless women I know naturally foster deep connections with other people who identify as female. I belong to a large cohort of modern advisers with a similar and inherently holistic approach. We’re empaths. We aim to help our clients feel empowered – we want them to learn to make well-informed financial decisions. We care passionately about mentoring our clients towards the bright future they deserve. Don’t you agree that we all need an ally who understands us and our challenges? I believe that everyone can benefit from a trusted partner who provides sensitive and relevant guidance.
Take action
Can you visualise a genuinely supportive relationship with your adviser?
If you’re a woman considering seeking financial advice, I encourage you to do so. It’s never too soon to take control of your financial future.
I’m ready to help you navigate the financial landscape confidently – let’s start today! To stay informed, subscribe to my blog and follow me on social media. Together, let’s pave the way to your financial success, one smart investment at a time.
If this article resonates, tell me about your experience. I’d love to hear your thoughts.
Reference: Baeckstrom, Y. (2022). Why Women Invest Differently: Insights from Behavioral Finance. John Wiley & Sons.
Suggested disclaimer: The information in this blog does not constitute financial advice. Past investment performance is not a reliable indicator of future results. The value of investments and investment income may go down as well as up, and investors may not get back the original amount invested. You are not guaranteed to make money from your investments and may lose money.
