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The Smart Woman’s Guide To Building Wealth

smart women guide - smartcrowd

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Times have changed considerably, as financial freedom is just as important a goal to women as it is to men! With women stepping out of stereotypical roles to venture into male-dominated professional spaces, they are accumulating personal wealth now more than ever.

But, truth be told, women still face many challenges in the financial world. Between motherhood and careers, women’s roles are evolving, and they often have to make major compromises to balance their commitments.

Despite making their mark in every field imaginable, from science to sports, some fully capable women still shy away from taking wealth creation to the next level through investing. And what a pity… considering that women are actually better at investing and managing money than men!

On the occasion of International Women’s Day, this blog will give you some insight and empowerment to start your wealth creation journey through investing.

Why Should Women Invest?

Logically speaking, women should invest simply because they can!

But besides stating the obvious, investing isn’t just a man’s game, as financial awareness and investments help women secure their futures, specifically in case of any unforeseen financial situations.

In fact, women should take the plunge more than men given they are paid less, take time out to care for children, have less exposure to financial literacy, and live longer than men, the latter meaning that at some point they may have to manage their own finances alone. Simply put, women today are taking on more financial responsibilities than ever before.

Despite all this, financial matters still elude some women, and they are less likely to invest, keeping their assets in cash. However, female investors have statistically continued to outperform men by a sizable margin, so a little less Warren Buffet, and more Geraldine Weiss, please!

Using Your Womanhood to Your Advantage

Though women invest less, they prove to be more successful investors by using the following behavioral traits to their advantage:

  • Managing money carefully: Women are better at managing finances than men, but don’t have enough conviction to start investing. To build financial responsibility, independence and wealth, it’s important to start investing, budgeting, saving and planning for retirement. Being financially disciplined involves habitually saving 20% of monthly income, for instance, as well as building an emergency fund worth at least 3 months of your expenses. 
  • Being risk averse: Women are more cautious when it comes to money, so they tend to avoid high-risk avenues and get less carried away. Generally speaking, women undertake more thorough research and due diligence before making any investment decision. On the other hand, men typically have more aggressive or high-risk portfolios compared to women. Because of women’s risk awareness, as well as their patience, they are able to diversify their portfolios by choosing investment instruments that align with their risk appetite.
  • Thinking long-term: We all have financial goals, from buying a home to providing the best education for our children. However, women take a long-term view, focusing on the whole journey and achieving certain objectives, as opposed to just the thrill of investing and chasing returns. American billionaire businesswoman, Abigail Johnson, articulated it best: “I demand pretty aggressive goal setting and a commitment to measured progress towards those goals because I don’t like surprises.”

This outcome-based approach helps them be more critical, patient, and efficient. However, there is no rule of thumb when it comes to investing as it’s a unique, individualistic journey considering women integrate career and family goals, among other commitments, driving them towards more meaningful investing.

What’s holding women back?

They have all the ingredients possible but they lack a touch of seasoning! To get an edge on building wealth, they should do the following:

  • Have more confidence: Women tend to be less comfortable and lack confidence when making investment decisions compared to men. One great way for women to gain confidence is by improving their investment knowledge. There’s a self-assurance that comes with knowing more about investing which helps you keep your cool to maximize returns. Additionally, remaining confident is vital, especially in times of market volatility. With this confidence, you can better handle market fluctuations and avoid making emotional decisions by selling at an inopportune time.
  • Don’t delay: Start investing as soon as you can and as much as you can. Many women delay as they think investing is something they can do later. But there will come a time where women might have to take control of their finances. Also, the earlier you invest, the more wealth you can accumulate. One driving factor for doing so is the ability to compound, or re-invest, your returns. This way you can grow your wealth by combining both the initial and accumulated earnings of your investment. Also, investing should be a five-year commitment at the very least, so by learning the ropes you will see the value of compounding in no time!
  • Keep learning: As stated previously, educating yourself about investment basics, asking questions, or getting in touch with financial or wealth creation advisors will do wonders for your confidence, and in turn, your portfolio! Women are already better at saving and managing money, but aren’t investing simply because they lack the know-how.

For starters, understanding compound interest and learning investment lingo will help you go a long way. You can do this by listening to podcasts, reading investment magazines, and staying up to date with all the current market trends. Much better than letting inflation eat away the value of your cash!

Final thoughts

By continuing to prove and improve themselves, the future of women in investing is transforming. Women are now taking charge of big financial decisions more than ever by laying a strong foundation for themselves to achieve financial freedom sooner. Still, there’s always room for growth.

While women are generally more patient, less impulsive, and better at managing money than men, they need to keep in mind that just starting, boosting their confidence, and always learning will lead them down a path of growth and opportunities. Remember, as a woman, you have all the power to be a smart and successful investor.

We hope that this women’s day more women empower themselves by taking their financial freedom and future into their own hands!

smart women guide - smartcrowd
More girls in the field please

Disclaimer: This blog is intended solely for educational purposes and shouldn’t be treated as financial advice. We suggest you always conduct thorough research, perform your own due diligence and consult with financial advisors to assess any real estate property against your own financial goals.

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