A week ago, I asked Markets and Money readers where all the female investors were.
There is plenty of data on female investors in the marketplace, yet I rarely hear from female investors in my line of work.
So I put a call-out asking any female readers to write to me, explaining why they invested — or why they didn’t.
I have been blown away by the sheer number of emails I’ve received over the past week.
The Markets and Money inbox was flooded with emails from female investors — and a couple of men as well.
However, I have never been more gobsmacked than I was in the past week. I have spent countless hours reading these emails. Most of them I’ve read twice. So many women shared their personal and financial investing journey with me.
Some emails were hilarious; some had me in tears. More than anything, I was thrilled that so many ladies found the time to write to me. There wasn’t one single stockbroker among them, either. How do I know this? You tell by the language brokers use…I’ll get to that later.
First, here’s what I’ve learnt.
Property or shares?
Women do invest. Perhaps not on the same scale as men. If they do invest, they aren’t going to brag about it. I heard countless stories of women being called greedy and miserable for seizing opportunities during market downturns. Interestingly, one woman pointed out that men are often called ‘ruthless’ if they invest when the market collapses.
Sifting through the emails, I quickly noticed a trend developing between those that invested in the property market, and those that didn’t.
Let’s start with why women don’t invest in the property market — and this surprised me.
Most women not investing in property wanted to crack the property market. The problem was that they found they didn’t have enough cash to get started. Because of this, some had turned to stocks to grow what little cash they had to buy a house.
One woman pointed out that, while she’d love to be a landlord in retirement, she felt this wasn’t the right fit for her. For very practical reasons. Properties require maintenance.
The older the property, the more likely it would require fixing. This woman felt that she not only lacks the muscle for repair work, she doesn’t have the labouring know-how, either. Therefore, almost all repairs would require a professional, and those costs would eat into her income. That…and the risk of bad tenants.
She acknowledged the risks of bad tenants were minimal. But, at the end of the day, she felt that potential repair costs and risks of bad tenants was the same potential risk as losing money in the stock market.
Then we had the female property investors.
At least a third of the women that wrote in were only investing in the property market, and wouldn’t go near the stock market.
Those with spare cash invested in property said this fit in with my argument last week. That is, a known dollar is better than an unknown dollar. Why risk it in the stock market when you may never see it again? For the women focusing on growing their wealth through property, they all agreed they were risk-averse.
As one reader put it: ‘I couldn’t sleep at night with a $3 million portfolio of shares. But I sleep just fine at night in my $3 million house.’
However, it was a lady by the name of Suze that introduced the ideas of ‘personal and practical’ and ‘conceptual and distant’ relationships with money.
Now, Suze wasn’t claiming to be a psychologist. However, she said that, over her lifetime of investing, she has come to this general conclusion.
Here’s how she breaks it down.
Women have more of a ‘practical and personal’ relationship with money. You see this in how some scrimp and save for the basics in life — a house or cash in the bank, to name two examples. They aren’t seeking luxurious lifestyles. They’re looking to ensure the basic comforts are taken care of.
Whereas men have the ‘conceptual and distant’ relationship with money. Men may appear to be more risk tolerant, but, again, based on Suze’s general observations, they’re able to distance themselves from a loss and not feel bad about it. In other words, the potential gain far outweighs any losses.
It’s like another language
The biggest reason women like property and cash over shares comes down to jargon.
All the women who wrote to me said that knowledge was power.
Part of the reason women flocked to bricks and cash was because they understood it.
I get this. The property market is everywhere. Those horrid current-affairs shows always have at least one property guru on every week. Lifestyle shows always have some renovation tip. And, regardless of what the segment is about, the final words are often ‘capital growth’ or resale value’.
Aside from that, talk on housing in Australia is impossible to escape.
Housing is in the newspaper every day. People have been investing in housing for a long time. The language is familiar. The cycle is familiar. How many times have you read a story about someone’s great grandmother and great grandfather buying a house in such and such an overpriced suburb for £400…and then selling it in today’s market for millions of dollars?
BBQs, family events, at work — someone, somewhere, has a property tale to tell.
My point is this: The language around property investment is everywhere. Through many decades of talking about it, women have been able to absorb the language associated with this type of investment.
Unlike the stock market.
The stock market was flooded with words they’d never heard before. It’s confusing, and none of the language used makes sense in the real world.
Let’s be honest, in a market full of men, run by men, it’s loaded up with industry jargon that does nothing more than make the people who use it feel powerful.
When you go see a financial adviser — generally the first point of call for women — they use a whole bunch of words that are confusing and redundant. One thing I have learnt over the years is that men are far less likely to ask questions about investment products. They’d rather bluster their way through.
Women, on the other hand, like questions. So many questions.
Part of the problem with the industry is that most who work within it hide behind this crap.
I personally know of women over the years who have said they never understood what their adviser was talking about. And when they ask for clarification, they’d get the same confusing words thrown at them, just in a different order.
It’s almost as if the financial advisers use this confusion as validation that the client needs them. ‘If you can’t understand the language, then you really need a professional to help you,’ is the message advisers send.
Here’s the truth.
When you strip all the mumbo-jumbo away from investing, you quickly work out that it’s much easier to understand than the professionals would like you to think.
One more barrier to entering the market
Of the women that are dabbling in the stock market, self-education was vital.
They didn’t just get some cash and whack their money in the market. They read everything they could get their hands on.
The jargon in the industry is as off-putting as figuring out what sort of company to invest in.
I read emails where women had spent countless hours reading everything they could about the stock market and how it works. Some have spent several thousand dollars on trading courses to boost their confidence. Others found analysts with an investing style they felt they could tailor to suit themselves.
When it came to picking stocks, many female investors felt it was better to invest in a sector that interested them, or one they at least understood.
As an example, one lady who worked in a bank bought some shares in her company, along with stocks in a collection agency. But this was the starting point.
Each female investor found that, as their confidence grew, their interest in other sectors in the stock market expanded. They’d find an area that appealed to them (honey, retail, technology, etc.), and would look for companies that had growth opportunities within it.
In many of the emails I received, women constantly said they were battling their own risk-averse nature at the start. Once they got their trading underway, they learnt to enjoy themselves, as well as to accept the risks involved.
Part of accepting the risk means that most of them are using stop-losses. Rather than chasing a stock higher or lower, many women learned to ignore the daily market gyrations, sticking with their investing plan instead.
It turns out that most women aren’t interested in speculative stocks.
They aren’t chasing a quick buck. My highly-informal research leads me to believe that they seek out stocks that offer the same outcome as property and cash. In other words, they were in it for the medium to long term. Carefully-selected companies with growth opportunities, and companies that pay strong dividend yields, are what women want.
Perhaps they’re just too tired…
Over the weekend, I caught up with an old colleague. I mentioned my recent article, and the overwhelming response I’d received from readers. He wasn’t surprised at all. My old workmate now works at a super fund; he reckons 95% of the customers he speaks to are female…and retired.
Over that late night drink, I finally got it. The biggest barrier for female investors? Time.
This point was summed up perfectly in one of the many emails hidden in my inbox. This reader, Kathryn, explained to me that she had experience in the industry, but that her ‘personal life experiences [led her] to believe that perhaps other women are just too exhausted to take on another task.’
As a single mum of two, I often wonder if I would have such a proactive approach to investing if I didn’t work in this industry. Between a demanding job, the kinder and school run, the three separate therapy sessions for my youngest child (who is on the autism spectrum), and what laughably passes as a social life — I’m bone-tired. I’m impressed when I leave the house with matching shoes and my shirt done up.
I get what it is like to have no time.
I can’t give you more, either.
Here’s what I can do, though.
Over the next couple of weeks, I’ll cover a couple of the basics when it comes to investing. I’m not going to tell you what stock to buy. Think of the next few weeks as an introduction to investing. You’re already reading the Markets and Money, so you know you’re interested in learning more and taking charge of your financial freedom.
Let’s take it to the next step, and get you investing.
If you have a topic you would like me to cover, drop me a line at firstname.lastname@example.org.
It’ll either be enough to get you buying shares, or send you back to bricks and mortar and cash.
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