Studies have long tried to sell the idea that women are more risk-averse investors than their male counterparts. But as a recent article in the Wall Street Journal suggests, the real story may be that female investors are just better at long-term financial planning.
“Risk averse doesn’t mean you’re afraid – it means you’re thinking,” Silicon Valley marketing strategist Becky Sager tells the paper.
The financial results speak for themselves. The Journal notes that an index from professional services firm Rothstein Klass looked at 67 hedge funds with female owners and managers and saw a 9 percent return through Q3 of 2012. Meanwhile, the HFRX Global Hedge Fund Index found that their male counterparts saw a much less impressive return of 2.69 percent.
In an interview with the Journal, Karin A. Risis, principal at the Vanguard Group’s Asset Management & Advice Services division, notes that women tend to be concerned with reaching long-term goals. Any reader of Straight Talk knows this a valuable trait to have, especially when it comes to initiatives like saving for retirement. Risis says, “We’ve found that in general, women, more than men, are disciplined thinkers, good long-term planners.”
While studies show women are particularly shrewd investors, they’re poised to lead the wider workforce as well. The Journal recently noted that consulting firm McKinsey is making a concerted effort to hire back female employees who left the firm to start families.
Meanwhile, a cover story on women’s wealth in Time by “The Richer Sex” author Liza Mundy reports that nearly 4 in 10 working women out-earn their husbands – an increase of more than 50 percent over two decades – and notes that if this trend continues, the next generation will find more families supported by women than men. Mundy notes in the Journal that academic enrollment trends show that in 25 years, women will dominate the once male-centric fields of law and medicine.
What no one should forget is that behind the statistics and trends are real women making remarkable – even historic – contributions to the world of business. Women and men of all backgrounds can find financial and professional inspiration in Forbes’ list of the five most powerful female venture capitalists, which includes Mary Meeker, co-author of Morgan Stanley’s The Internet Report, and Theresia Gouw Ranzetta, who led the investment in digital publisher Glam Media.
And if you want to get a picture of the future of investing, Investopedia offers up a list of 7 outstanding female investors who are changing the way the world is run.
Do you consider yourself a risk-averse investor? What are some of the benefits of cautious, long-term financial planning?