Invest…Like a Girl!

 What does it mean to do something “like a girl”?

There is a new ad campaign that addresses this question. And in the past, the statement made it seem like doing something “like a girl” is a bad thing. Click here for the ad: Like A Girl

As most of you already know, our household is filled with girls. And when raising our girls, both Dan and I instilled in them the understanding that your gender does not limit you. You can do anything you choose and in our household that meant softball, soccer AND dance. It also included shoveling in the winter and landscaping in the spring! There was never a limit on what they were capable of achieving and therefore, the whole world was open to them.

Mile 3, leading ladiesWhen it comes to investing, are there advantages to investing “like a girl”?

According to a 2010 study conducted by Boston Consulting Group, women participants said they were frustrated by their advisor assuming they have a low risk tolerance and therefore, providing them with a small number of investment options because of their gender. Some indicated that they were offered strategies that focused on social issues rather than their long-term goals.

Studies may indicate the inclination for women to prefer below average investment risk; however, this belief may be untrue for many new female investors.

According to a recent Schwab study “Women and Financial Independence” which surveyed 500 women, each with an average of $1.3 million in investments, women are mainly concerned about being able to establish a personal relationship with their advisor, including preferring meetings rather than email. In addition, of the women surveyed, 88% want advisors who consider their complete financial situation, not just their investment portfolio.

As more women are achieving higher positions in the work place, the needs of women and men have changed. Gone are the days that only one spouse makes the financial decisions and instead, both are involved in the financial and investment process.

Which is a good thing. Women tend to invest with a “buy and hold” strategy allowing them to reap the benefits of staying the course with their financial plan. Patience is a virtue and utilizing this philosophy will benefit them in the long term. Studies of  gender differences in investment behavior consistently show that, in the long term, females outperform men.

Studies show that women have a different approach to investing than men and, thanks to biology and psychology, they’re often more successful. LouAnn Lofton, author of Warren Buffett Invests Like a Girl–And Why You Should, Too writes

Testosterone can help traders take risks and move fast, making loads of money in the meantime. But too much testosterone for too long can encourage too much risk taking. The way women tend to approach investing is healthier and calmer, and it’s the way we should all approach investing.

Behavior is a key component to having a successful financial outcome. And there are certainly things that can be learned by both genders in order to achieve their goals.

But instead of focusing on the differences between how men and women invest, why not focus on their long-term goals and how best to achieve them. And remember, investing “like a girl” can be an advantage!

Find an advisor who understands this new reality.

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About Maureen Crimmins

Maureen Crimmins is co-founder of Crimmins Wealth Management and a fee-only independent financial advisor. Have a financial question? ASK MAUREEN

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