Are women any different from men in terms of investment approach and objective? Jayshree Pyasi posed this question to a few IFAs and financial planners and got some interesting views
In India, investing is seen as a predominantly male activity with the majority of distributors, fund managers and investors being male. However, increasingly, more women are taking charge of their investments.
A U.S. study shows that women tend to trade less and diversify more. Also, the study brings out that there are certain behavioral characteristics that make women a better category of investors and transcends them to the level of planners.
What makes women a planner instead of investor?
There are other studies of behavioral investing that infer that women invest their portfolios more conservatively. Women generally have lower risk tolerance and do not tend to move in and out of their investments when volatility in the market is great. Women do not hesitate to ask questions and are quick to seek help. Women avoid unnecessary risk and do their research properly with long term goals in mind. Staying the course over time is their pattern and this often leads to greater returns.
There are fundamental goal based differences that differentiate a male investor from a female investor. Gaurav Mashruwala of ACE explains this by saying, “Women definitely have different goals than men. The investment priorities of a man may lie with building property whereas women would prefer to invest in gold and gold based securities.”
Increased participation in decision making
With more women earning independent income, their participation in financial planning has increased. Mukund Sheshadri of M.S. Ventures says, “Today, both husband and wife attend financial planning sessions. This is a very encouraging trend as a clear understanding of the financial status by both the man and wife can reduce the chances of future financial crisis.”
Are women risk averse?
Some IFAs believe that majority of women feel financially insecure and are averse to taking risk.
Chandulal Vasa of Need Based Invest says, “Most of the women want to have a regular cash flow and stay away from funds that cannot give regular, stable returns.”
There are no differences
However, Masarrat Mona Fakih, an IFA, has a different take on the scenario. She feels the approach towards investment varies from person to person, with gender playing no role in it.
“I have women clients who are well informed and some women clients who are not so well informed. Some have an increased risk appetite; some are averse to taking risks completely. All this is true for my men clients too. So it is not about sex of the client but more about the mental make-up and investment psychology of the particular person,” says Mona.
Most women investors take their time making investment decisions and hold their investment for much longer. Ragini Pandey, an investment banker, follows the same path of long-term investment. “It is important to have a basic knowledge about current events and trends in the market. Over time, I have read a lot of material online and developed a familiarity with the topic. Soon I realised that it is not as difficult as I thought it would be,” says Ragini.
Advisors can be mentors
The intimidating graphs and jargon that characterizes all investment related websites and magazines may put off many women who desire to enter the market. But the ones who overcome their initial hesitation often do well. Likewise, understanding their assets and finding a mentor in an advisor who can guide them through market fluctuations will certainly help women make effective investment decisions.