Women are beating men in investments: Truth or false?

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By: sanderspatricia29
on 17th Aug,2017

It is said that women lack confidence about investing than men. But many stats show that female investors are now doing good in investment. Investing in ETFs is the sign that women are no longer scared about long-term investment.
Women are beating men in investments: Truth or false?

The conventional anticipation is, when it comes to long-term investment, women take fewer risks than men.

However, the anticipation is no longer a truth anymore.

These days, for most of the successful women, long-term investments are not the scary subject anymore; they are taking chances to maximize the potential investment gain.

However, a majority of women don’t consider the risk involved in the investment because they have less money to make investments.

It is true that the gender wage gap still exists and this is the main reason men and women make investment decisions differently.

The wage gap between the men and women

It's true that female workforce is increasing but, there is still a wage gap between the male and the female workers.

According to a U.S. Census Bureau report, women earn 20% less than men for the same full-time job.

A 2015 research by the Bloomberg revealed that "Amongst 2007 business school graduates, the salary spread between men and women was $7,000 ($105,000 versus $98,000). But in just seven years, the spread widened dramatically to $35,000 ($175,000 versus $140,000)".

The wage gap between men and women impacts on how much disposable income women can have as compared to men.

As a result, women take fewer risks to make investments, rather they prefer short-term investment to assure their profit.

Women are better than men when it comes to investing

It is true that men and women make investment differently.

However, women are better than men when it comes to diversifying the portfolios.

Women also make wise decision to lessen the risk of loss. Taking the fewer risk often help them to gain more profit.

The Fidelity agrees that women are doing great in long-term investment.

A recent survey conducted by the Fidelity has revealed that women save 0.4% more than men. Every year, women are also earning 0.4% more, in respect to investment, than men.

The difference may be small, but it creates a huge impact over a lifetime of saving and investing.

Alexandra Taussig, Fidelity's senior vice president for women investors, has said that “The myth that men are better investors is just that - a myth".

Investing in exchange traded funds (ETFs) proves that women are taking chance in long-term investment.

Though there are financial gaps between men and women, yet women are making the long-term investment decision.

Now, more women are investing positively in exchange traded funds (ETFs).

Most of them are young millennials who are more open to using exchange traded funds (ETFs).

  • 40% of women are mutual fund investors.
  • 26% of women said that they are thinking about ETF investment.
  • 31% of women have already invested in ETFs.

It is said that the use of robo-advisory service makes investing easier than ever.

Observes Stacy Marcus, the CEO, and founder of the advisory firm Women Investing Now, quoted that "More people are using all digital advice platforms that use ETFs as investing tools".

The importance of investing in ETFs

As per the recent data, the ETFs (Exchange Traded Funds) have become the fastest growing long-term investment is the USA. An ace investor can go for investment in ETFs to get the attractive return.

ETF has become popular because:
  • ETFs are traded on the stock exchanges.
  • It has different asset cases like stocks, commodities, and bonds.
  • The ETFs are becoming popular due to its low costs, tax-efficiency, and stock-like features.
  • ETFs fetch the same return on investment (ROI).
  • ETFs are traded on an exchange and during market hours like the equities and indexes.

Things women should know about before making ETF investment

You might have heard many advantages about investing in ETFs. Many of you might have invested in ETFs already. However, many of you don’t know about different ETF trading strategies.

Here you go:

1 Go hedging

Few ETFs offer you to take a chance of hedging. If you want to hedge against a decline in the market, then you can invest in inverse ETFs or leveraged inverse ETFs. Remember, the inverse ETFs rises when the market actually falls. Thus, you can hedge by investing in inflation-protected bond ETFs. This is a good way to combat with If the rising inflation. If you hedge by investing in currency ETFs, you can survive during the currency fluctuation.

2 Diversify

Investing in ETFs helps to diversify into investments. It helps you to diversify across a wide area of asset classes like US equity, fixed income, and foreign equity. It also diversifies into investments that have a comparatively low correlation with major asset classes like commodities, real estate, small cap stocks, and emerging markets.

3 Don't invest a lot of money

To avoid the loss while investing in ETF portfolio, you should not invest a lot of money at first. Try to create a portfolio mix of basic funds and bonds with at least 3 or 4 ETFs. This way, your returns won’t suffer much. If you get a return of around 5% from one, you may get the return of 5% from another. That way, you get a return of 10% in total, which would have been less if invested in one type of fund or bond.

4 Buy and sell ETF in a proper time

You should buy and sell the ETF in a proper time. When an ETF crosses above the average price, you must buy it. You should sell it off when it crosses below the average price. Buy those ETFs that are consistently performing well over a large span of time. Sell them off when the performance goes down.

5 Avoid broker, seek expert help instead

If you invest through a broker, you need to give an amount of your returns to the brokers. It will reduce the profit you earn. Therefore, you must seek an expert’s help instead of taking help from a broker. An expert can advise you about the best investment strategies.

The good and bad thing about investing in ETFs

There are certainly good and bad things about the ETFs that you must know before making the investment in ETFs.

The advantage of ETFs:

You can easily sell or buy ETF at any time of the day and also bet on the prices and opt for a short sale. Investing in ETFs can give you the same return like investing in currencies or commodities. The returns you get from an ETF trading hardly goes into capital gains taxes.

The disadvantage of ETFs:

The bad aspects of an ETF trading are that you may not always get the best return from it. Some of the ETF funds are not that tax-efficient. You must try to consult the experts before you dive into the investment. The returns generally depend upon the market. You should research beforehand before making the investment in ETFs.

Lastly, when it comes to investment industries, the Wall Street is known as male oriented, but now the story has changed, female investors are progressing remarkably.

However, regardless of gender, any person can improve the financial situation by making wise investment decision. To do so, the person has to be financially knowledgeable and updated regarding the recent investment market. Any kind of investment involves risk; thus, you should be aware of the loss and profit involved with your investment strategy. Thus, it is advisable to seek expert opinion before making any vital investment decision.

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