By Jenny Q. Ta, Founder & CEO of Sqeeqee.com and Co-Founder of VCNetwork.Co
As a woman who built and sold two Wall Street broker-dealer firms, I am proof positive that women can be rockstars at investing. Research shows that in 2015, when the stock market fell, women lost an average of 2.5pc, compared to 3.8pc for men. Also, women have returned 59pc since 2007, against the average returns by men of 37pc. Yet, Wall Street remains the good ol’ boys club. Women have a naturally strong intuition – a perfect trait for investing – but male investors still outnumber women. Why? There are several factors that contribute to the gender disparity, all of which can be changed with the right people stepping up to the plate. Here are a few of the reasons why women tend to shy away from Wall Street, some differences between men and women, and what women can do to get out there and start investing:
Women are great at saving, so where are they investing?
Men are more likely to use the bulk of their excess savings to make aggressive investments, whereas, women tend to take their time to make the smart decisions and diversify their savings into different types of investments. Because of this natural instinct, women do in fact invest aggressively, and not just on Wall Street. They open businesses, invest in their children’s education and accrue real estate investments. There isn’t enough current data to identify where all monies saved are being diverted into the stock market, but women have definitely already begun funneling some of their savings into the exchange.
How do male and female investing behaviors differ?
One of the biggest investing behaviors differentiating women from men is that most females only invest in what they know and understand. They rarely speculate and aren’t likely to place their bets until they’ve asked questions and received the right answers to all of them.
Women are also more patient than men. They rarely jump at good (or bad) market news and will wait out a day or two to dissect the situation. It’s usually within these extra days that the news cools off and a more decisive path is made clear, whether to sell on the position or keep it for long-term hold. Men, on the other hand, tend to jump right into the news, good, bad or otherwise. Therefore, they’re likely to take more risks of the unknown. They sell stock they should be holding onto too soon, or they hold onto an investment when they should’ve just cut their losses. Men like to make a quick buck, but with this behavior, losses can quickly occur and accumulate, as well.
How can women better invest in the stock market?
On Wall Street, especially, it’s important for women to be on top of their game. They should never give their entire portfolio to a money manager, stockbroker or financial advisor, to make investment decisions on their behalf. Sure, women should seek their counsel, utilize their analysis and ask them to explain the details. For example, they should ask the advisor why they recommended a certain stock to be purchased and another to be sold. If what they explain makes sense, the woman’s intuition will give her the green light to agree with them and permission to execute on an investment decision. If what the advisor says doesn’t feel right, she can stick to what she knows best – her intuition – and politely pass on their advice and/or suggestions.
Personally, I always employ my intuition when it comes to making important decisions from investing, to entrepreneurship, to management. My intuition keeps me from acting blindly on impulse or responding emotionally to erratic behavior, and I tend to think tenfold before executing any given decisions. A woman’s intuition may include a certain unique strategy. Invest in what you know, always think long-term, sell with discipline and you’ll see yourself excel.
