"I prefer to leave money decisions to my husband”.
If she was the typical caricature of a homemaker, perhaps I wouldn’t have been surprised. But this was a working professional; a woman I have known personally and admired for her work ethic. I had seen her take her career by the metaphorical horns, and climb her way up in a financial institution. So, her reply when I asked her about her wealth-management practices left me hung jaw-ed.
She raised my curiosity. Being in the wealth-management business myself, I decided to deep-dive and conduct a quick public survey on my Twitter handle and ask some important pecuniary questions of the women I knew. The results from more than 350 respondents were quite insightful:
27% – Felt the lack of control over money made them rely on a male member for decision-making
34% – Feared making the wrong investment choices on their own, and hence relied on their husband/father
21% – Felt their lack of financial knowledge was the main reason for not taking their finances into their own hands
21% – Believed in the societal norm of the husband being the one to look after money matters
In a country like India, a woman’s lack of control may arise from a host of factors - be it parental, societal, or marital. Since it is a deeper issue, I will not touch upon it much in this piece and instead attempt to address the other three factors.
Fear of losing money a.ka. The 34 percent
Benjamin Graham might have coined the term Mr. Market, but in reality the financial market is gender-neutral. Your propensity to lose money is similar to your husband’s or father’s. Investing, contrary to many beliefs, is not the same as gambling. Though there are some individuals who approach the market in this way, it is definitely not how you invest and grow wealth in the long term.
The stock markets in India may be called ‘satta bazaar’, but they have come a long way since the days of yore and ignorance. At present, there is enough and more information available for investors to make an informed decision. With the digital revolution, tools like artificial intelligence and machine learning have made data and information easily available for anyone to research and invest.
Lack of financial information a.k.a The 21 percent
These surveyed women might be surprised to know that their husbands may be as ignorant about investment lingo as they themselves are. But that’s OK! Imagine you want to buy a car. You would need to know what a steering wheel, brake, accelerator and such are. But no one expects you to study mechanical engineering or be an expert on car engines in order to own a pair of hot wheels. That’s just a bonus; not a must-have.
Similarly, when you are investing, you need to understand what assets you are buying and why they are good for you. Basic terms like mutual funds, ETFs (exchange traded funds), fixed income, direct funds, management fee, expense ratio, performance fees etc. are worth knowing. But you don’t need to take a course in finance or be a trader to make the most of the market.
It’s also prudent to utilise new age wealth management platforms aiming to make it easier for regular people like you and me to build wealth. The good news is that with AI-enabled robo advisor apps, money decisions have become trés simple. The click of a button gives you recommended investment advice - and this is the same across genders, or investment prowess. So, people bemoaning the lack of financial knowledge have an ally here which they need to use to their advantage. Pronto.
My husband looks after the money a.k.a The Other 21 percent
Well, even if he does guard the huge corpus, the truth is you don’t need much to start investing. Begin with as little as Rs 100 or Rs 500 via systematic investment plans in mutual funds. Aim to build a significant corpus, brick by brick.
Even if you have considerable savings, but have never dabbled in investments, it is advisable to start small. Going back to the car analogy again — when you are learning to drive a car, you start with a good old Maruti, instead of attempting to drive a BMW straight away. The earlier you begin investing the better; it helps create a corpus to absorb any losses in a volatile market such as 2020 has been.
To wit: Data says women are better investors
Warren Buffett once said, “The most important quality for an investor is temperament, not intellect.”. A December 2018 story in ‘Forbes’, titled “Why women are better at investing” mentions a few surveys underscoring this fact.
When researchers at University of California-Berkeley analysed the common stock investments of both genders from over 35,000 households between February 1991 and January 1997, they found some groundbreaking statistics. While men traded 45 percent more frequently than women, women had outperformed men by 0.94 percent per year. The Warwick Business School surveyed 2,456 investors, which included 450 women between April 2012 and July 2016, and a similar trend showed up in this research too. Women had outperformed their male counterparts by about 1.2 percent per year.
Let me give you some more data. Fidelity International conducted a study — Women and Money — where over 8 million investment accounts were reviewed. The conclusion? Women earned higher returns and were better savers.
Yet, the popular perception is to the contrary encapsulated by another Fidelity survey, where fewer than 9 percent of respondents felt that women were better investors than men.
So, to the women who are reading this (and to the allies who want to see the women in your life succeed) I suggest this: dump the husband; only metaphorically of course, and use your smartphone to invest.
Start small, understand what your investment is (not how it works) and don’t gamble. With a plethora of platforms available, it is time now for women to get into the wealth creation game like never before and prove that what Buffet can, women can too. And better.
The author is the CMO and Brand Strategist at Kristal.ai. An engineer from IIT-Delhi and an MBA degree holder from Temple University, Philadelphia, Siddhant has worked with notables like BlackRock, Shuttl, and 9.9 media.