Women & Investing: It’s More of a Style Thing
Many studies have revealed that women tend to be less aggressive compared to men when it comes to investing. Probably you have heard many theories that try to explain why this is the case. One of these theories is that inequality in terms of paychecks results in a somewhat conservative approach. This is because most women try not to lose what they own.
Another theory suggests that maternal instincts play a crucial role. This theory argues that the prospective instinct credited to women makes them reluctant to take risks. Besides, the more conservative approach to investment is usually associated with different traits such as risk aversion, less frequency trading, and more concerns about losses. According to an acceptable logic, all these are negative attributes you should avoid them if you have to make investments in the real estate and financial markets.
Bad traits could take a toll
The primary reason most critics argue that ladies need to be more aggressive is the risk-reward trade-off and longevity. The longevity theory supports the common belief that women live longer compared to men. It appears there is no argument here as numbers around the world have proved that females are likely to live longer than males.
Just think about it. Living longer means women are likely to face more significant expenses compared to men. At the end of the spectrum, they need to meet all their basic needs for many years. These basic needs include food utilities rent and all other necessary expenses that occur monthly. Some of these long-term expenses that women are supposed to think about include hospitalization long-term care insurance and more.
These items or needs are very expensive. Both political agencies and organizations in most industrialized nations are minimizing the contribution the government makes towards these necessities. Many decisions in corporate America are likely to go the same way as insurance providers and employers provide more expensive and less insurance coverage. These factors can result in significantly higher costs for the elderly. Remember, the older people are likely to be charged to higher premiums for health insurance and other high out-of-pocket expenses.
Taking a higher level of risk in terms of pay investments results in higher rewards. This is where the risk-reward trade-off factor comes in. Clearly, investing in real estate or stocks can lead to greater long-term returns. That means you should check movoto.com if you want to invest in real estate or companies that are offering profitable stocks.
If you don’t want to invest in such opportunities, take your money to the bank because it will be safer and deliver better results compared to keeping it under your pillow.
A more conservative approach to investment leads to a low risk-taking. That means women are likely to earn less income from most investments compared to men who are likely to generate more over the same periods because they are risk-takers.
These factors show that women are likely to end up with less money than they require to meet their monthly bills and save for better retirement. From a theoretical perspective, these arguments sound valid. However, things are quite different in the real world.
Bubbles, boys, and bottom lines
The feminine approach to investments seems to have been branded as a losing plan. On the other hand, men have dominated the financial markets around the world. Men tend to handle operations, control the money, and dominate platforms such as Wall Street. But empirical evidence shows that their investments returns consistently trail the results of investments made by women
A recent study done by a former Wall Street trader, John Coates, suggested that high levels of testosterone and risk-taking are likely to lead to irrational exuberance. Women have lower testosterone levels compared to men. John Coates argued that women are less prone to two irrational exuberance associated with market bubbles and economic crisis.
Tapping into your feminity
Women, the evidence is clear. You no longer need to be a man or act like a man to win in the investment world. Indeed, doing the exact opposite increases your chances of financial success. Here are important principles to keep in your mind if you choose to get started in investments.
- Rely on your logic and ignore those theories that you have had. Be sure to plan carefully and make the right investment choices.
- Pay attention to effective asset allocation. Whether you choose to invest in real estate or stocks, asset allocation is always an important aspect of investments.
- There is not going to be a perfect time for market entry. Just figure out the bucket entry requirements and align them with your chances of success.
With effective planning, caution, and effort, women can make different types of investments and achieve their goals eventually. Take your time and pay attention to the bucket details.