Udayavni Special

Six reasons why women make for ace investors


Team Udayavani, May 6, 2021, 9:48 AM IST

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“Learn from a smart man if you want to earn in millions; Learn from a smart woman if you want to be a millionaire”

The far ends of the gender spectrum – men and women exhibit contrasting traits when it comes to money and personal finance. On one end, men typically tend to be more earning-oriented while women on the other hand are typically interested in wealth creation, financial security, and financial independence. While financial success is often brought in by an effective combination of both character extremes, we acknowledge the rather underappreciated traits of women that make them a guide to achieving financial success more effectively.

Here are a few attributes we can learn from women that will help us be better investors and help us pace faster towards achieving financial goals.

  1. Eyes on the prize!

Women tend to have their eyes on the prize, almost always. While they enjoy the journey, most of it can be attributed to their anticipation of the destination. Women view money as a means to an end – the end may be about financial security, financial independence, or a financial goal. Such result orientation is critical for one to be a great investor as well. It is critical for investors to not lose to or react to interim challenges just as it happens, but rather take a step back and make a decision basis its impact on the larger picture – or here, financial goal.

  1. Enthusiasm is not the opposite of patience.

Women are often known for their high-spirited approach to life in general. But are also known for steadfast commitment to anything they take up. Women ensure that their exuberance does not translate into frantic actions. On the other hand, women are known to maintain composure when it comes to decision making and result in anticipation, especially in money matters. They may be rather excited when embarking on their investment journey but will take their own sweet time to mull over every detail and perspective required to make a sound investment decision. The very first step of taking a well-informed decision helps them align expectations and set mental checks. The deeper understanding and ability to play out multiple scenarios in their head make them quite a stoic investor.

  1. Perspectives with angles wider than the latest smartphone camera!

An opinion so popular that it qualifies to be a metaphor in itself is that a woman is exceptionally skilled at multitasking. Great multitasking requires one to be able to be highly perceptive, foresighted, and effectively reactive. This skill is reflective of a woman’s ability to see beyond the obvious and be able to effectively factor in outlier situations. Such a wide degree of perception allows for women to be exceptionally skilled at investing which involves a coherent understanding of a multitude of vectors at the same time.

  1. Never take the service road while on a road trip!

Women tend to value consistency, sustainability, and longevity over short-term excitement. Like in successful investing, such behaviour in decision making helps them optimize risks at all levels while successfully avoiding most rude shocks. While off-roading on the rough service roads could soothe your craving for adrenaline, doing so while on a long road trip may end up causing more pain than pleasure. The risk-reward does not make sense. Obviously, risk aversion may come at a cost but the benefit of predictability outweighs the cost – especially when excessive risk is not required to achieve the financial goal.

  1. Choose courage over fearlessness.

The absence of fear comes close to idiocy. The presence of fear accompanied by the will and ability to move forward nonetheless is courage. Women seem to have understood this well enough. You will often observe women being worried about consequences, but there is almost nothing that can stop a woman who has made her mind. For an investor, it is critical to appreciate the presence and probabilities of risk. At the same time, it is critical to account for all and yet has the heart (and stomach) to go ahead with what their mind has decided is right.

  1. Curiosity does not always kill the cat!

Women typically tend to be curious, inquisitive people. They constantly want to know everything about everything. While this may lead to certain not-so-productive behaviour at times, but when applied to the world of investing it almost never goes wrong. It is critical for great investors to thoroughly understand and know as much as possible about a financial product or security they intend to invest in. Curiosity leads to questions, questions lead to the quest for answers, answers lead to learnings which translate into knowledge and eventually, with experience, into wisdom.

While there is a whole lot more one can learn by simply observing a regular woman going about with her life and applying it to investments, it is best to leave you with food for thought enough to spark your curiosity.

 

Written by: Nirav Karkera, Head of Research, Fisdom

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