It’s safe to say that Wall Street and the financial marketplace is largely male-dominated. Women only run 2% of hedge funds and there are only a handful of top female managers. When we think of the world’s greatest investors, we think of Warren Buffett, Charlie Munger, Benjamin Graham, Mohnish Pabrai… and no women. There definitely need to be more opportunities in investing for women.
There are plenty of stereotypes that are said to be responsible for this, the main one being that women are apparently more risk-averse and men are more confident and better at math. But if that were the case, then men should beat women when risky assets do well and vice versa when they fall.
Female Investors Running Hedge Funds
Hedge funds run by female investors have actually outperformed in both up and down years. Recent studies have shown that women tend to manage smaller hedge funds, which tend to do better than larger ones, which could be the reason why.
According to index experts Hedge Fund Research, women have had a return of 4.4% over the past five years compared to 4.2% from the HFRI Fund Weighted Composite Index, which covers hedge funds across all strategies and genders.
Women Tend to Focus on Long-Term Goals
It’s also been said that women experience better returns because they don’t buy and sell shares as often. They focus on long-term goals when it comes to money, they take their time to research before making investment decisions, are patient when the market is volatile, and they listen to advice from experts. Does that strategy sound familiar?
Regardless of the battle of the sexes in the financial industry, the lack of women in investing is not because men are better. Actually, if you take a closer look, men and women make similar investment decisions even with the same education.
Yup, the lack of women in investing is simply because we just need more women to invest! It’s a shame to see that only 48% of women and 56% of men have a 401k and 40% of women and 48% of men have an IRA.
Women Live Longer on Average
Women can and should learn how to invest and here’s more reasons why:
On average, women earn three-quarters of what men earn, which means less money to go into retirement and qualifying for lower pension rates.
Also, women tend to leave the workforce earlier than men to care for children or relatives, which can also reduce social security benefits and overall income. On top of that, women average to live five to seven years longer than men, which means they’ll need more retirement money in the long-run.
If you’re looking to depend on your spouse, three times as many women become widowed. Or if you get divorced, it takes ten years of marriage for you to claim spousal social security from an ex, however most divorces happen before then — within an average of seven years.
An Investing Approach That Works for Everyone
The best way you can balance out and combat all of that is growing your money exponentially through investing.
More women are graduating from college, entering the workforce, and making the same or more than their male counterparts. So don’t listen to those negative stereotypes and make your way into investing, too!
Anyone who is making money should be investing, no matter how much money they make or what gender they are. Everyone should have a nice retirement!
And with Rule #1 investing, you won’t be taking a risk, you’ll be taking a step in the right direction toward change. To jumpstart your investing success, be sure to download a FREE copy of my Beginner’s Guide to Investing that maps out everything you need to know in just 8 steps.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.