By Carla Nemr, Chief Business Development Officer, Tickmill
The online trading environment offers many opportunities for women to advance their wealth and maximise its value. However, despite many strides that have been made to create a more equitable trading environment, research continues to show that women are underrepresented in the sector. Bridging the gender gap and bringing more women into the fold of financially-savvy investors requires a deep understanding of their unique needs, the way they make decisions and their approach to financial management.
A research study conducted for the University of Sydney Business School found that individual women investors outperformed both domestic and international institutional investors by a significant margin. Further studies revealed that women investors have also outperformed their male counterparts in times of both stock market buoyancy and decline. Similarly, hedge funds managed by women have outperformed those managed by men.
She says that despite this evidence, the reality is however that the trading environment – particularly online – remains a male-dominated space. Turning the tide against this disparity depends on our collective ability to provide women with the support they need to make confident trades and take calculated risks where necessary. We need a concerted push to make inroads towards building a more equitable sector in South Africa.
Barriers to change in the investment world
Recent research by BNY Mellon found that only one in ten women globally feel that they understand the world of investing and how to make their money work for them. According to the same study, only 28% of women felt confident in their abilities to make the right investment decisions and as much as 45% of women viewed the stock market as being a high-risk environment and therefore an undesirable way to grow their wealth.
The representation of women in the investment space is also stifled by its perceived inaccessibility, which may leave women feeling reluctant to enter the arena. The lack of approachable resources and user-friendly platforms tailored to women’s needs can deter them from taking the first steps towards investing. For this reason, Tickmill has invested in the functionality and performance of its online trading platform as much as we have invested in the ongoing training that is needed to help investors reach their full potential. Our platform offers resources such as webinars, ebooks, technical analyses and reading material that can help women access the knowledge and the tools they need to succeed.
This educational component is vital to the sustained performance of online trading platforms, particularly because they can assist novice investors in their journey to becoming veterans of the trade, and introduce financial concepts to industry newcomers. Education and training not only provide knowledge but also instil confidence by demystifying complex jargon and processes.
Understanding what makes women investors unique
The groundwork for better industry representation, however, relies heavily on developing a better understanding of how women investors differ from male investors. They are, for example, more risk-averse than men and as research suggests, this relates to the fact that women are more likely to underestimate the potential gains, whereas overconfidence in men is often linked to more impulsive and riskier decisions.
To remedy this, guidance should be provided on how to make ‘risk-appropriate’ investment decisions. Women investors should be encouraged to assess and evaluate their own risk tolerance by considering their financial goals, time horizon, and comfort level with potential fluctuations in their investments. Employing these ‘failsafes’ against potential losses, women will be able to grow more comfortable with the notion of risk.
In a BMO Wealth Institute report, women reported to have lower levels of financial knowledge than men and to remedy this disparity by ‘putting safety first’ when it comes to investing. In this regard, it is also widely known that women are more likely to seek help and guidance from industry professionals when making investing decisions and to conduct more thorough research before going ahead.
The thoroughness of women in the way they approach investment decisions from multiple angles before taking action, can be both an advantage and a disadvantage. These traits can however be leveraged to promote better financial literacy among women, which may in turn help them realise better returns. Gaining a deeper understanding of investment fundamentals will empower investors to make independent and informed decisions, fostering self-assurance in their financial choices.
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