Women investing, winds of changes

The hard truth

One year has passed since HeavyFinance was founded and more than 7 Million euros financed later, we found that over 80% of our investors are men.

We are strong believers in gender equality, so facing this difference we feel that it is time to shout out to all the women reading this and push for change.

But besides the matter of bringing the investment ecosystem to the XXI century, there are also very practical reasons to insist on a more balanced investor-base gender-wise in HeavyFinance.

For starters, women are simply the best investors.

Yes, you heard right.

Women in charge… in the background.

In one of our first loans in Portugal, while we kept phone conversations with Mr. X, it was his wife taking care of everything in the background, and Mr. X would refer to her as “the one that knows about this”. So while we would talk with Mr. X we would email extensively with Mrs. X regarding financials and other important details.

This is also a common situation in other markets where HeavyFinance operates. Women represent roughly 40% to 45% of decision makers when it comes to agricultural loans.

This might be due to the fact that, generally speaking, women are more prone to details, to control their immediate surroundings and understand exactly where they stand.

Be it because women have been assuming this role for thousands of years, because of social formatting, brain chemistry or a nesting-related instinct, or just because they see themselves in the position where they have to take care of those forever children called man. Whatever the reason, most women are more thorough and show more composure than men when it comes to finances.

And given that there is a balance already on the borrower’s side of HeavyFinance, we would like to see more women stepping out of the shadows and tip the scales on the lender side.

Financial independence and Future

Women getting involved in investing is not just a matter of “balancing the scale”. It’s a fundamental step to financial independence and to ensure a comfortable future and (or) retirement.

Taking into consideration the current global situation of the “social state” and the expectations for the foreseeable future, financial independence all across the demographic board is key to the sustainability of our society (or any other for that matter).

Everything starts with one simple step, the first investment. And before we move on, let me kill a couple of myths right away:

– Your first (or any) investment doesn’t have to be 4 digits onward, it can be just 100 Eur as long as it happens and starts a habit.

– Investing does not always pose a threat to lose all your money. There are a lot of quite safe investments, and even in the case that something goes wrong, you’ll always be able to recoup a part of your funds (except in extreme cases like bankruptcy or foul play).

– And lastly, it is normal to feel a rush, a bit nervous, and some doubt when investing for the first time (and even any time). That shouldn’t stop you, it just means that you are aware and human, and there is nothing wrong with a little excitement.

Why are women better investors?

While I don’t know why women are more prone to have certain skills or qualities when it comes to handling investments, we have the studies that pinpoint exactly what those skills and qualities are.

But don’t take my word for it, here are a few studies that prove this statement right.

– A  Fidelity Investments study shows that women save more and earn annually 0.4% more than men.

– The  Warwick Business School study found a higher number – female investors outperformed males by 1.2 percent.

– According to the  Terry Odean study “Single men trade 67 percent more than single women thereby reducing their returns by 1.44 percentage points per year more than do single women”.

I could line up more studies, but I believe that the point is well made with these prominent publications.

But what qualities make up this difference?

  • DYOR

No. Not the brand of luxury accessories, but the acronym to “Do Your Own Research”. Women spend more time doing due diligence and researching their investment possibilities and thus being more prepared to make better choices and more aware of what to expect.

  • Farsight

Here I am going to invert the subject to men – Men are more prone to treat investments like a lottery, sometimes sacrificing financial security to the possibility of making a fast buck. While women tend to avoid risky short-term investments and focus on the long run.

  • Diamond hands

Paraphrasing Elon Musk\’s tweet into words, women have diamond hands. Stats show that women are simply better at following a strategy, even if it means holding and weathering the storm. This resistance to fear and endurance of bear markets make them less likely to panic sell and face losses.

  • Divide and conquer

Women are more concerned about market volatility. To minimize its impact and risk they balance and diversify their investment portfolios (more than men).

  • Nerves of steel

To sum it all up, there seems to be a stronger gender-specific tendency to discipline when it comes to investing, well exemplified by the fact that women trade on average 45% less than men.

Winds of change

More women started investing during the pandemic, and we can put the finger on the reasons that built this change.

– Easier access to retail investing platforms. In the past years, we have seen a surge of platforms and services that allow retail investors to handle a large variety of assets. These tools can be independent or built-in on other everyday banking Apps, and include stocks, commodities, crypto, debt, and virtually every other asset. This represented a small revolution to the investment ecosystem by bringing it to the masses. Today, everyone that owns a bank account can easily buy, sell and perform other operations with a vast array of assets.

– The possibility to invest with lower amounts in the past years convinced more women to start investing. The process of democratization of investing mentioned on the point above was accelerated by another key change – the possibility to micro-invest. That’s right, today you don’t need to own thousands of Euros/Dollars (or equivalent) to start investing. You can start to build a portfolio with sums as low as 20 EUR/USD per month and take it from there. Even if you have the capital available to invest more, you can opt to start slow, learn and gain some confidence before increasing your stakes.

– The need to look into other ways to achieve financial security in a moment of severe hardship, especially for women. The 2020 pandemic had a strong impact on the way that people lived their lives. A lot of people got unemployed or laid-off, many other people started working from home losing touch with their employers. All these changes brought about a generalized feeling of uncertainty and fear for the future. This feeling is naturally deeper in social groups that are historically more vulnerable (is there any larger vulnerable social group than women?). On top of this, interest rates are low and money keeps being printed at high speed, which means that the money in the bank is simply not underperforming inflation and losing value. In this context, for a lot of people, investing a part of their savings or income was (is) a way to have a feeling of control over their financial futures and to fight off the depreciation of their capital and the loss of purchase power.

– An extra amount of time to go online, explore, and learn about investing – sounds like a natural shift. With the current (or recent) reality of the pandemic, a lot of people spent more time at home. With these worries and doubts on their mind, they simply started googling and searching for options. With all the offers out there, they were bound to find something as a starting point (for investing).

There are trends that confirm the shift in women’s stance towards investing.

We see more and more successful women paving the way for newcomers. Leading by example and sharing their knowledge. While at the same time, new women arriving in this ecosystem look for this guidance and wisdom.

We see an increasing number of women’s investment communities and clubs. These can be closed groups, exist on social media such as LinkedIn or Facebook, or be platform-specific, and are often spiced up with investment competitions to incentivize performance.

We also see women-specific Subscription-Based e-Learning. Women teaching women makes it more relatable and even easier to understand motivations and address them properly while presenting courses of action.

Keep on changing the world!

As said before, women are the largest vulnerable (or prone to vulnerability) social group. By stepping up and taking action to ensure financial independence, they pave the way for other and more granular social groups, and push them to move and also work for their financial independence.

It doesn’t matter how you arrive here. Your motivations. Your level of expertise. The platform(s) you use or the assets you handle. Keep investing, or take the first step if you haven’t yet. That’s what matters.

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