Four ways women are harnessing their financial power

Sumayya Davenhill

Financial habits vary from person to person, influenced by their biases, knowledge and approach to managing money. Some studies show that certain traits typically associated with women have proven to be a successful formula when investing. Below are four ways that women are making successful investment decisions.

1 - Investing with a purpose
When investing, women are clear about what they’re investing for from the outset. They’re also more cognisant of the social impact of their investment, deeming sustainability and ESG factors as becoming increasingly important (1).

Women tend to have different goals when it comes to investing. The shift from male-dominated households has created a whole new category of women-led households and blended families. In South Africa, 42% of households were headed by women (2). In these households, not only do women serve as the primary caregivers, but also often fulfil the role of breadwinners, too. These women could be financially responsible for multiple dependents (aging parents, children and relatives).

Investing can be used as an avenue to grow their wealth or build their retirement nest egg while meeting their short-term financial obligations. For an idea of the time, contribution, and which fund/s to invest in to help achieve your goal or goals, you can use our Goal Calculator to help get you started.

2 - Following a disciplined, patient approach
The Wells Fargo “Women and investing” study found that women tend to have a more disciplined approach to investing (3). Women also display far more patience in riding out market volatility before acting on knee-jerk reactions. Investing small amounts over time and remaining invested by resisting the temptation to withdraw or switch funds helps to ensure that an investment can achieve its desired objective.

3 - Considered risk-taking
Typically, women tend to be more risk-averse than men (4). But in investing, the greater the risk, the greater the potential for higher returns.

Fortunately, it’s possible to have the best of both worlds – to mitigate risk while achieving returns. Following a consistent investment approach with a diversified portfolio of asset classes can help to ensure that a balanced amount of risk can achieve returns in various market cycles. Over time, this approach has the potential of smoothing out returns and achieving more consistency on a risk-return basis.

4- Partnering with a professional
Women are more likely to seek professional guidance when making investment decisions (5). Partnering with a professional adviser, who will help them to define their investment goals and a course of action to achieve these, is a decision that women are more likely to make.

Women investors on the rise
The number of women investors is moving in a positive direction (3) and they are demonstrating their potential in shifting the investment landscape despite the gender pay gap (6) (resulting in lower disposable income available to invest) and the fact that they are faced with a largely male-dominated investment industry.

Sources
1 https://www.ubs.com/global/en/wealth-management/our-approach/investor-watch/2021/the-new-valuables.html
2 https://www.statista.com/statistics/1114301/distribution-of-female-headed-households-in-south-africa-by-province/
3 https://www08.wellsfargomedia.com/assets/pdf/personal/investing/investment-institute/women-and-investing-ADA.pdf
4 https://hbr.org/2020/12/how-the-gender-balance-of-investment-teams-shapes-the-risks-they-take
5 https://www.ubs.com/global/en/wealth-management/insights/chief-investment-office/market-insights/2022/women-and-investing-reimagining-wealth-advice.html
6 https://www.stellenboschbusiness.ac.za/news/2022-08-01-equal-pay-unequal-taxes-sa-women-carry-greater-tax-burden
7 https://www.womensreport.africa/wp-content/uploads/2022/07/WomensReport_2022.pdf