Why (and how) smart women invest

By the good people at Hatch.

Thanks to a touch of financial PTSD, money is still a taboo subject for many women. Whether we’re traumatised by bad money choices, student loans, or even worse, bad break-ups, we end up with the short side of the stick when it comes to growing our wealth and saving for our futures. Don’t even get us started on the pay gap! You know the one where women make 80 cents on the dollar compared to men. Men with the exact same job! Men with the same amount of experience! [Enter collective sigh HERE].

The investment gap and the pay gap are closely related. If we’re not making the same amount of money, how could we possibly be investing at the same rate? Well, we’re not. Most of us ladies choose to squirrel our savings away rather than watch it grow on the stock markets. From young girls, we’ve been conditioned to be cautious. While parts of the world might be scary, we’re here to tell you that the share markets are not.

Mind the gap, the investing gap.

The world of finance often sounds like it runs on a secret language, tailored just for men. We talk about beating the market, building a portfolio and level playing fields. The language used reflects sports, construction and combat. The confusing jargon and the particularly exclusive vernacular is completely deliberate. It’s not just you – it’s intentional. Basically, if they (THEY!) make investing confusing, you’ll hire a financial planner to do it for you, or you won’t even do it at all. You’ll say, “Investing isn’t for me.” Classical investment language is designed to intimidate you, especially if you’re a woman. And the industry is so male-dominated that even if you wanted to have a frank conversation with a financial adviser, they most likely won’t understand your experience, concerns, or goals. It’s precisely because of this engineering that we have an investment gap where men make all the gains, and women are left behind. It’s a vicious cycle, and a sexist one too. But it doesn’t have to be this way anymore.

More and more women are talking about money. Just look around you. From blogs and articles to podcasts and books, they’re talking about everything from how to unf*%k their finances, to managing motherhood and working. The numbers tell a story. Look at the increase in the number of women’s personal money diaries, both online and in print, and you’ll see that we’re interested in what money women are making, how they spend it, and how they invest it. Clock the range of seminars, websites and podcasts aimed at female investors who want to get started in the stock market. Even Girl Guides have launched a Saver badge to get young girls and women to start thinking about saving money.

All this new money talk is leading to a financial revolution. Women are getting pretty fed up with all of this inequality: gender, pay, investment, and wealth inequality, and aren’t afraid to say it. It’s about time we started to speak up, after all, we’re going to live at least 5 years longer than our male counterparts, so we’re going to need the money to support ourselves.

It’s true: women are excellent investors.

Look, setting up our financial futures isn’t a competition. And we’re not here to say that one gender is better than investing than another, but, here’s the thing: when women do invest, they do a better job than men. That’s just a fact. Warwick Business School did a study in 2019 that looked at men and women who traded shares and funds using Barclays’ Smart Investor service in the UK. Well, guess what they found? Women made an average annual gain of 1.94% above the FTSE, while the annual return made by men was just 0.14% above. Ouch. Why the difference? Men are more likely to make higher-risk plays. Women, on the other hand, are more cautious, so even when we invest less money, we make better returns. 

What makes a good investor anyway? It’s not about gut instinct, an ability to time the markets, or even research prowess. It’s all about the D: DISCIPLINE. Successful investors have a financial plan that they stick to regardless if the markets are crashing and the sky is falling. Research shows that women panic less when the markets tank, and don’t get cocky when they’re rallying. To the men who think they can outperform the market: that strategy hasn’t proven to be successful in the long run. 

Where are the gals putting their money?

Stocks, shares, and markets are gender-neutral, but there are certain trends when it comes to gender differences in investing. For instance, women are more likely to back companies that are impactful or ethical. At Hatch, we even have a ‘female’ themed search filter, where you can browse companies and funds that champion workplaces with great gender diversity and a commitment to female leadership (SHEO instead of CEO). 

Women, if we can generalise, are quite loyal to their favourite brands. On Hatch we see our female investors taking an interest in companies like Lululemon, Match Group (Tinder & OK Cupid), Nike, and Green Gold (energy ETFs) to name just a few. Investing is a huge wealth generator, and the share markets have returned an average of 9.5 percent for the past 90 years, even including the horrific downturn in 2007. And still, women are unsure about getting involved?! One ANZ study showed that women end up with $79,000 less than their male counterparts in their Kiwisaver when they retire. Is that inspiring enough to help you get started? Thought so!

Being overly-cautious means you’re being risky.

One of the primary drivers for women avoiding the share markets is perceived risk. As Senior Business Journalist Susan Edmunds recently shared with us, people often see property as the safe bet while the share market is left alone. But you can build yourself a portfolio of either that is on either end of the risk spectrum, depending on what works for your individual situation. Taking a step back to view your entire financial position, including your home if you have one, Kiwisaver, any other assets and savings accounts can give you some perspective. If you’re a newbie, you probably don’t want to be putting your life savings into a single share. But investing $200 in a bundle of shares can be a great way to dip your toe in the water and spread your risk. This is where exchange-traded funds (ETFs) can be a good place to start. ETFs allow investors to buy a number of investments in a single trade. Think of ETFs as a shipping container full of investments – usually company shares. If you invest in an ETF, you buy a share of the entire container and own a tiny slice of every investment in it. 

The most important thing you can do to fix the investment gap is simple: invest in yourself. People who understand basic personal finance and investing tips and tricks are more likely to take control of their money situation. Start by joining our 10-day, step-by-step investing guide to find out. Over 10 days, the Hatch team will guide you through everything you need to know about getting started – from setting up a brokerage account to buying your first shares. No jargon, no boring finance stuff, no pressure and no strings attached.

Want the replay of the Hatch x Her Career Investing webinar?

We won’t promise we can make you the next Warren Buffett, but if you’re an intermittent dabbler with investing training wheels, or maybe you’re sitting on the sidelines and ready to make your first money moves, we’ve got you.

Hatch has been kind enough to give our community a $20NZD top-up on your first $100NZD or more deposited through Hatch. Happy investing ladies!

Full disclosure, we at HC do not “earn” anything from you clicking on this link and/or signing up to Hatch, however we’re big believers in the power of investing and felt this was a great match!

Hatch Investing

Hatch is an investing platform who are making investing more exciting and doable. Hatch let's ambitious Kiwi women and men back what they believe by investing in companies that speak to their hearts, minds and wallets. We’re talking brands like Apple and Lululemon, or companies that are women-led and diversity focused.