There is a small but growing dataset on the performance of female investors, be they individuals or women-owned or managed funds, it certainly appears that women can and do outperform in some cases meaningfully.
At the root of this outperformance are the different ways that women money managers behave compared to men. Having more female money managers is a smart diversification strategy.
Here are five primary reasons behind those differences:
1. Disciplined approach
Achieving any long-term goal requires persistence and patience. Disciplined saving and investment are pre-requisites to accumulate a healthy corpus of funds for fulfilling major life goals. Women are known for discipline in their approach towards money management.
Every month they set aside a certain sum as saving from household income which they traditionally invested in gold.
With rising awareness levels and increasing availability of attractive investment options, women have started showing interest in diverting these savings to mutual fund SIPs to earn better returns.
This dedicated approach towards investment makes the magic of compounding work for them and thereby set them up for long-term success.
2. Analytical thought process
Women bring unique strengths to the decision-making process. Studies show that women adopt an analytical approach to decision making more often than men. To address a problem, women showed reliance on data, while men inclined to go with their gut or intuition.
Women take time to weigh the pros and cons of their decision and are generally quite calm while making a critical choice. This attitude is different from men who have been found to be quick in making judgments and less likely to examine facts that might prove them wrong.
This attitude gives women an edge in making rational financial choices that have a long-term impact on their financial well-being.
3. Better at budgeting
Time and again, women have shown through their management skills that they are better at budgeting. They effectively handle household income and expenses to provide a comfortable lifestyle for their family.
Most of us have witnessed our mother or grandmother dividing the money into different jars or envelopes earmarked for various expenses such as food, clothing, education, etc.
This trait helps to cut unnecessary expenses and ensure that the optimum amount is diverted towards savings and eventually investments. Budgeting is a pre-requisite to effective financial planning and acing this trait lays the foundation for women to build their finances security.
4. Long-term perspective
A peep into the history of women savings and investment in India reveals that a majority of them accumulated funds over a long period of time to use those funds for special occasions or contingencies.
This approach towards savings and investments is a distinctive characteristic of women investors. It has been observed that instead of chasing short-term gains, women tend to work towards medium to long-term financial goals.
Any financial planner can vouch for the fact that a long-term perspective towards savings and investments is the key to build wealth. Their long-term thought process ensures that women investors have a head-start on the journey towards financial well-being.
5. Willingness to learn
Building a financially secured future has become one of the top priorities for women everywhere. They are keen to explore investment options that can help them to make the most of their savings.
Though men have customarily taken care of money management on their behalf, women now want to take the lead in financial planning. They are willing to learn the tricks of the trade in order to take independent charge of the money management function.
They are open to accept their shortcomings, seek advice and make amends in the course of their financial journey. This attitude towards learning makes them more confident and well-equipped to efficiently handle their money.
