Women's Finance: Traits of Successful Women Investors
Many women look at investing as this daunting task they will never understand well enough to actually pursue, let alone be successful. The truth is that we inherently possess certain traits or qualities that are crucial to being a successful investor. Qualities, such as patience, willingness to acknowledge mistakes and recognizing when help is needed, can help an investor be as successful as possible.
As women, we are typically more patient than men. This trait can be extremely helpful when investing. Excessive trading costs have historically been one of the reasons individual investors often underperform the stock market as a whole. A study submitted to the SEC in 2010 found, “because women are less likely to indulge in excessive trading, they outperform men.” (Behavioral Patterns and Pitfalls of US Investors) Avoiding big risky bets that can single-handedly drag down a portfolio can sometimes lead to better risk-adjusted performance.
However, being too cautious can have its downfalls too. Being a good investor means finding balance. While patience is key, playing it too safe can have the opposite effect. Being unaware of how to balance various types of risks can leave you vulnerable to shortfalls in your retirement savings or other financial goals. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investment strategy will be successful. But perhaps the biggest risk of all is not taking the steps need to secure your financial future.
Women have another trait that will help them monumentally when it comes to investing; the ability to ask questions. It seems so easy, yet many investors are scared to admit how little they actually know about investing. Recognizing what you don’t know can be an enormous asset. Have you ever heard the phrase “I don't know what I don't know?” Well, being willing to ask questions and understand some basics will serve you better than sticking your head in the sand.
All of these traits, along with the help of a trusted financial advisor, can lead women to be great investors. Why take a risk with your money and hope that it works out? We can either learn from our own mistakes or the mistakes of others, and I choose the latter. Don't let your fear prevent you from gaining knowledge and experience. Recognizing that you don’t have all of the answers and need the assistance of an expert is just a smart financial move!
Do not let your lack of knowledge and overall fear hinder you from getting the most for your financial future. Investing is a lot like parenting. No matter how much you plan or how much you read about it, you may never really feel like you know what you are doing! But, you prepare, ask a lot of questions and seek guidance along the way.