What Women Think of Finance and How They Are Investing Differently from Men

It is known that, with some exceptions, men tend to be risk-takers, while women are more prone to financial security and balance. While there is not a right or wrong way to look at it, these differences are present and can decide whether a family of a corporation is financially successful or not. 

While it has been proven by a number of studies that there are pros and cons for both approaches, a balanced save account will yield different results from a risky investment. Let’s have a look at how women see finances and why they are investing differently from men.

1. Women Have More Stable Plans

Socially and biologically, there are obvious differences in the behaviors of women and men. This is reflected by the financial decisions and investments that the two groups take and how they take them. 

However, while male is more prone to be looking out for new opportunities to jump on, women tend to carry on with their original plans. This is not necessarily a negative, as usually women investment plans and portfolios are more thought into and examined.

In fact, men tend to create short-term plans that work for a specific investment or a specific time. Women prefer to create a steady growth strategy and follow it through. While they often adjust the original idea depending on an external factor, they are less likely to invest quickly in a superficial project.

2. Are Women Risk-Averse?

Financial decision-making processes are completely different when undertaken by women or men. Only 38% of women have been found to be involved in a risky financial investment, while for men this percentage rises to 45%. 

While at first glance this could mean that women are not as likely to invest in a not safe financial product, there are other actors that had been taken into consideration for this research.

In fact, generally, women in America have fewer funds and capital available than their male counterparts. Female investors have declared that they would be more likely to invest in a risky project if they had more funds available. Therefore, this statistic can only be due to men having higher investment opportunities available to them.

However, historically, women have been seen to be less prone than men to take risks, both with the household and corporate finance. This has created a general idea that women in financial management are not able to grow the funds available. 

While this is not necessarily the case, often cautious managers have been able to maintain a steady stream of income even during crises and hard financial times.

3. The Career of Women in Finance Is Different from Men’s

Women represent 46% percent of the total workforce in finance in America. This means that just under half of the employees in the finance industry are female. 

However, despite the high percentage they are not as well represented as men, with only 15% of women working at an executive level. This has created the concept of a “glass ceiling” in the corporate promotion process and convinced a number of women to renounce their ambitions.

Studies conducted in 2007, have seen that women have less confidence than men in their financial and investment abilities. However, this was not matched by their actual skills. They were in fact able to undertake all the right ad logical financial steps to improve the state of a family or corporation.

Today there are still fewer women than men applying for financial job positions. While this is not only due to personal confidence, 58% of men declared that their knowledge of the industry was “very good”. Oppositely, only 47% of women state their understanding of finances as good. However, in the 2008 crisis, women had been seen to do 6%better than men.

4. Changing Behaviours

That men are better investors and financiers than women are a concept that comes from a history of male-dominated fund and investment management scenario. However, nowadays the landscape in finance is changing quickly, with the opening of new female investment clubs and dedicated projects.

The differences in behavior are likely to fade away in a few years when more women will be willing to enter the industry. Moreover, the pay gender gap is closing and with more funds available more women are encouraged to invest. 

While today’s situation is caused by a lack of knowledge and opportunity, with the increasing participation of women in financial decisions, the scenario in the industry is changing rapidly.

5. Women Prefer Funds

Several studies conducted over the years regarding the investment behavior of women and men have actually revealed that it is not that dissimilar. 

It is true that men have a tendency to invest “gambling-like” and sometimes randomly in projects that they have not studied well. Women, on the other hand, have been seen to prefer safer financial products that guarantee a positive return, even if smaller.

Interestingly, however, more women than men have been seen to hold trust funds and savings accounts and they are willing to use those a safety net in case of wrong investments or decisions. Oppositely, men tend to invest the majority of their resources.

Moreover, to describe the approach often used by women, female investors tend to consider, and study and they often start off with a smaller investment than their male counterparts. 

Funds with a consistent record and a guaranteed return are the two main factors that encourage women to invest in that specific project. Men tend to opt for more volatile individual stocks which could offer a great return, but it does not guarantee future stability. 

Conclusion

While men and women tend to see finance and invest differently, there are pros and cons to both approaches. Women have been shown to have fewer funds than men and sometimes in need of cash advance, which has been seen as one of the main reasons for avoiding risky investments. However, the environment in the finance industry is changing rapidly.

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Catherine

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