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7 Deadly Financial Sins for Women

Katerina Sousalis
Published by:
Katerina Sousalis
Published on:
January 07, 2020
Last modified:
March 8, 2023
Modoras Pty Ltd ABN 86 068 034 908
7 Deadly financial sins for women blog banner

It’s just a matter of perspective.

To be successful in something, like investing, many may think an overhaul of one’s values or ethics is needed. But this is far from the case, all it takes is to embrace one’s inherent qualities and make them work to one’s advantage—just like the proverbial lemonade.

Successful investing for women

Fewer women are investing than men, according to statistics. But it’s not for the reasons one may think.

It doesn’t mean women are bad at investing. As a matter of fact, women investors have more successful portfolios, which generate higher returns by 0.4% on average, according to a study by Fidelity Investments. This only shows that women can outperform men if only they have more confidence and the means to do so.

The findings are significant in uncovering the underlying reasons why women are perceived to lack the investing know-how most men possess. Think about this: only 9% think they can perform better than male investors?

The key word here is “perceived” as it’s all in the mind.

Women and their financial mindset

The lack of proper mindset could be a barrier to women’s financial success. A study called The Financial Power of Women found that women lack the confidence to invest and that they worry too much.

Although 42.2% are concerned about their financial situation, only a few take action for these reasons: they think investing is too complicated or it requires a lot of money. 28.3% of women lack confidence, which could be alarming because it may affect their retirement savings.

Getting past this mental hurdle can be tremendously helpful for a woman’s financial well-being.

Investing for men versus investing for women

Female vs Male: Perspective on Investing

Conservative thinking could be partly to blame. And so are women’s inherent traits. Consider the following:

  • 45% of men trade more than women because they look at investing as a game they need to wine.
  • Women look at investing as a means to achieve financial security.
  • Women may be more risk-averse.
  • 26% of women are more likely to use their extra cash to pay off a loan instead of investing because they were taught to prioritise daily finances.

Gender Roles and Education

Gender roles play a part in the attitude of men and women towards investing. A report called A Fresh Perspective on Women’s Financial Security shows that women’s perspectives on financial security vary. It found that:

  • 53% of women were taught to focus on dealing with everyday finances and not investing at an early age.
  • 41% of men were taught about investing early.
  • 25% of women are taught about investing early.
  • 38% of women were found to be active participants in investing.
  • 71% of women are more hands-on on general household budgets and financing.

Other insights include:

  • Women have less in retirement savings due to gender gaps in pay and superannuation.
  • Women make less money than men.
  • Women live longer than men, which means their retirement savings erode quicker.
  • Women take career breaks to raise children, resulting to less time in the workforce where they could be accumulating super.
  • Women are more likely to work part-time, which pays less.

All these findings could mean that how much women may get at retirement will be significantly lesser than men.

Women and Risk Aversion

Interestingly, it’s the same traits that could help women become more successful at investing. Their aversion—which should be looked more as awareness—to risk could potentially help them avoid making investment errors—and lose a significant amount of money. 46.2% of women are very cautious when it comes to investing, compared to only 26.8% of men. What does this mean?

It may mean that women may tend to take extra caution in ensuring all investment decisions they make are well-informed. Despite the low confidence levels (15.7%) compared to men (26.9%), women do not lose sight of their goals when investing, which serves as a strong enough motivation.

While many women are insecure about their investment knowledge, they are likely to want to learn more about it. They plan purposely and take on a holistic approach. They less likely to make impulsive investing decisions especially during market fluctuations.

They are also seen to exercise more patience than men, who are 35% more likely to make trades. The ability to hold em not fold em, may prove fruitful in the long run.

So what can we do to lessen the gender gap and help women realise their investing potential?

Frankly speaking, a lot needs to be done to address the key causes of these gender gaps and inequalities in the system. Policy development will also play a crucial role and it would require the help of not just one party.

However, there are elements that are well within our control, like our mindset.

Investing for success doesn’t completely rely on strategies or even gender, for that matter. The reason men and women perform differently is they have different perspectives.

And if we adopt a more conducive outlook towards investments, not only could we help close these gaps, but we could also stop looking at investment as a man versus woman debate  and start treating it as a means to help everyone fully realise their lifestyle potential.

What about you? Do you want to make better investing decisions?

IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (No. 233209), located at Level 3, 50-56 Sanders St, Upper Mt Gravatt Q 4122. The information and opinions contained in this fact sheet are general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

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