Women should take advantage of their inherent investment instincts

In a world where a financial disparity between men and women still exists, women have some distinct advantages when it comes to investment, writes Deputy CEO of Momentum Metropolitan and CEO of Momentum Investments, Jeanette Marais.

We cannot deny that there is still a financial earnings gap between men and women, especially when it comes to money. Yet, when it comes to investing, women have inherent advantages over their male counterparts.

In the episode of money show Geldhelde on VIA (DStv channel 147), we addressed this topic – looking at some of the traits women have that make us good investors and, importantly, how to harness them.

As a woman who has built her career in this field, I can confidently say that women should use their natural born talent for investment.

A 2019 study by the Warwick Business School found that women outperform men by 1.8% on investment returns. They did this by analysing the behaviour and returns of 2800 investors over three years by looking at a range of differences between the genders and investment behaviour.

The study shows that, generally, women tend to take a longer-view perspective and trade less frequently. This reveals a more considered approach by women, with greater focus being placed on the realisation of a financial goal, rather than the thrill of investing.

If women opt to play to their strengths, they would soon realise that these qualities have resulted in our superior investment prowess and form the basis of Momentum Investments’ underlying philosophy of outcome-based investing. Staying invested over the long-term produces superior returns, which is why we follow an outcomes-based investment philosophy that aims to shift investors’ focus away from tracking performance and towards their personal investment objectives.

And when we consider the fact that we’re already on the financial back foot in terms of earnings, that we tend to outlive our male friends (so our money needs to last longer) and that we often need to juggle work, children, and other household responsibilities – the need for us to harness these inherent investment traits is even more evident.

So, for all the women out there who want to seize their natural investment power, here are seven quick tips to kick off your investment journey:

Advice should come first

Momentum’s Household Financial Wealth Index indicates that only two in ten women are likely to obtain professional financial advice. It is important for women to partner with a professional financial adviser or mentor that understands, respects, and takes their unique needs into consideration.

This is the fastest and most reliable way to get on your journey to success.

Make bold choices

Historically there has been no better way to grow your money than through investing. There is no denying that investing comes with its share of risks – but, choosing not to invest is even riskier. If you are just starting to invest, the best thing to do is to talk to your financial adviser to help you kick start your investing journey. Chat to your adviser about the importance building a diversified investment portfolio that includes investing a portion of your money offshore.

Compound your interest

The magic of compound interest will grow your investment exponentially over time. Bear in mind that you need a lot of time to achieve meaningful growth.

Avoid the switch itch

Investors are 2.5 times more likely to switch funds as a result of their current fund performing poorly, than as a result of another fund performing exceptionally well. Even when the markets get rocky, try stick with your investment strategy and portfolio choice. There will be times when you have the urge to switch investment funds, but don’t chop and change – research says that in almost every case you’ll be worse off financially.

Pay off your bond

Owning the house that you live in is the best risk-adjusted investment you will ever make. So, paying a little bit extra on your bond every month is the right choice, but taking extra money out of your bond and spending it on consumer goods is a poor financial decision.

This article is an extension of a money show hosted by Deputy CEO at financial services company Momentum, Jeanette Marais.