Women And Investing

Mirriam Macwilliams on women in investing

 

 

 

 

 

 

 

 

Whether they know it or not, with the proper knowledge, women make very good investors.  This may come as a bit of a surprise to the average individual – it did for me – because when I began learning how to invest I attended quite a few seminars where there were obviously more males then females.  You begin to wonder whether this in fact is a male-dominated arena.

However as former National Director of Education for the US Stock Investors Club in the US, I myself was able to participate in such a study here in the US where our results indicated that women actually had a higher percent rate of return than men over the same period of time.

Since women then have a higher propensity for trading success then how can we involve women in the process of investing?  Let’s look at some of the reasons that keep women from investing:

Investing Process too Complicated

Studies have shown that women find the process of investing to be complicated.  This is certainly a valid concern.  Simple things such as opening a brokerage account may create an environment of fear for those who have no idea how to proceed.

Many seminars already in existence take for granted that individuals already have a basic fundamental understanding of the stock market and this is obviously not the case.  That is why there are now more seminars popping up that are devoted to teaching women the basics of investing.  A definite step in the right direction.

Not Enough Time to Devote to Investing

Women think that they need to devote many long hours to the process of making trading decisions when in fact that is not the case.  The investing process has evolved tremendously over the past few years alone.

Investing has become a much more simplified process then even when I began investing because of the ease of acquiring information (as is now provided through the Internet) and the proliferation of investing tools are that are again designed to streamline the investing process.

In reality, the longer your time horizon in a particular stock the least amount of monitoring is actually involved.  So anyone with just 60-minutes a week can learn to become a successful trader.

Fear of Loss

Based on my studies the number one reason that keeps women from investing is the fear of loss.  I can certainly relate here too because when I began investing in the stock market in the US we were in a predominantly bullish market environment where stocks for the most part increased in price.  They would have their occasional pullbacks however the uptrend would resume and people where able to very quickly make large some of money.

However this was not my experience.  I did lose money – for almost two years before I began to understand how money is made in the market.

One of the questions I sent out to members of the US Stock Investors Club was: when they closed out a trade whether they were pleased with the fact that they made money or whether they were pleased with the fact that they did not lose money.

The larger percent of the women respondents indicated they were pleased they did not lose money.  In contracts, however, the male respondents indicated that they were pleased that they made money.  Therein lies the difference between the genders – risk versus reward.

Because of my initial negative experience in trading I realized I needed to step back, reassess and develop a trading plan.  One that enabled me to know precisely when was the good time to buy the stock and then again when it would be a good time to sell that stock.

My trading plan incorporated money management principles that focused on my ability to protect my investment capital while it was in the market.

My personal trading philosophy became not on the return I would expect on the trade but rather on the loss I might experience hence — the preservation of my capital became my primary focus.

So believe it or not – the fear of losing money is the very reason that makes women good investors!