When it comes to investing, what’s still holding women back?

08 September 2023 Consult by Momentum
Corne Welman

Corne Welman

An interesting paradox was recently uncovered in a research paper by the Global Financial Literacy Excellence Center, titled Fearless Woman: Financial Literacy and Stock Market Participation.

The paper revealed that women appeared to be less financially literate than men, finding that females answered “do not know” to more survey questions relating to investments than men. However, when the “do not know” option was removed from the survey, women often chose the correct answer.

Corne Welman, Financial Adviser at Consult by Momentum, believes that women lack confidence rather than knowledge, and says that along with this, they also display more fear of investing than men.

“I find that most of my female clients’ concerns are based on the fear of losing money, not setting the ‘right’ goals, and making mistakes. Women don’t accept failure as easily as men, and would rather not invest than invest and make a mistake.”

Women are instinctive savers
However, when it comes to saving, Corne says that women are often better savers than men. “Women tend to save easily as their fear of not having access to funds drives them to put money away.

“This is more noticeable in households where the man oversees or manages the finances and women have to ask for money or rely on allowances.

“As they don’t have the assurance that they will always have access to funds, they tend to ‘stash’ money in savings accounts. This makes them feel secure that they will have easy access to their savings, and are protected against the risk of losing money in, for example, a riskier investment.”

Corne says that South Africa is still a largely patriarchal society and many women also don’t have access to quality financial advice, with the man in the house usually making the bulk of the financial decisions.

“Investing money can be complex while saving money in a bank account seems like the simpler choice. But that is not where the growth happens. In fact, one will lose money in the long run if you do not protect against inflation,” she warns.

With more confidence, women can be great investors
According to research by Fidelity, more women appear to be more confident in planning for retirement (31%) versus investing in stocks (19%).

Corne says that this is likely because women view retirement as a long-term savings goal. “They feel more comfortable parting with money for longer-term goals but again, the fear of losing money can make them reluctant to invest in stock classes.”

Even though female investors are more risk-averse and less active in the stock market, research has shown that they are actually very good investors.

“Women are more disciplined and follow a considered approach when it comes to investing and trading. They do not let ego get in the way of their investment decisions and tend to do more research and analysis than their male counterparts.

“Women also tend to stick to their goals and keep to a financial plan (once they have one) – more so than their male counterparts. And contrary to popular opinion, they also tend to make more rational decisions than men when it comes to emotion!”

Corne says that the biggest mistake women make when investing is believing that they are not good investors. “This narrative keeps them from making better investment decisions – they will save in interest-bearing investments like fixed deposits and miss out on the potentially higher returns that investing in the stock market would bring over time.”

Many women tend to prioritise the needs of others at the expense of their own, directing more money towards their family’s needs rather than their own long-term financial goals.

When it comes to their finances, Corne has the following advice for women:
1. Set goals with a financial planner. With a solid plan, risk will be minimised and you can reach your goals more easily and without fear.

2. Know your investment options. Discuss your options with a financial planner and do some research. A lot of information is available at the touch of a button.

3. Do your homework. Write down your goals and areas where you can start saving money. Look at your past spending patterns to create better future saving habits. Read a lot.

4. Put your own needs first – pay yourself (your investments) first!

5. Be persistent. Never give up – remove the word “can’t” from your vocabulary.

“To quote Momentum Metropolitan’s CEO Jeanette Marais, A man is not a financial plan. By engaging an experienced financial adviser, you can empower yourself to start taking charge of your finances and build financial prosperity for the future.”

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