February 21, 2014
I just spoke to over 3,000 investors at ‘Nordnet Live’ in Stockholm, and the toughest part was figuring out how to summarize four years of research findings in 15 minutes! I did it though and in the process learned four truths about women and money. Actions speak louder than words Women tend to be perfectionists and they will often describe themselves in a self-deprecating manner. If you ask a women if she is confident dealing with money, she will usually say something along the lines of “not really” or “I should probably know more.” One of the women I interviewed last year had a Masters degree in Finance from Harvard and she leads a business practice at the largest law firm in Canada. Despite the fact that she spends her days negotiating major financial transactions, she told me she didn’t feel that she knew enough to manage her own money! Lesson: Don't doubt yourself. Women learn from life lessons and stories. In 2010, I commissioned an Angus Reid survey of 1,000 women across Canada. The most interesting statistics were in response to a question on how they learned about money when they were growing up. Just over 10% said they had studied from textbooks or taken investment courses, and only 15% of the women had taken advice from the financial industry. The large majority (73%) said they had learned about money either through real-life lessons or from other people who acted as role models. Lesson: Developing a financial strategy is easier than you think. Women invest to make a difference. Based on a series of interviews with 100 accomplished women around the world, I found out that over 50% are spending some portion of their potential retirement funds on what matters to them now rather than investing in traditional asset classes. A quarter of the women said they were placing a sizeable portion of their entire net worth in a business that is directly related to their personal cause. Women invest in causes or concerns that are meaningful to them. Lesson: Incorporate your passion into your financial strategy. Practice makes perfect. When it comes to investing, smart women practice: they begin with a small amount of money, and get started buying and selling stocks using an online account. Once they have the ‘feel’ of investing, they are in a better position to make a decision. If they are truly interested, they invest for their own portfolio. If they decide that they would rather do other things, they hire a trusted advisor to invest on their behalf. Either way, they take action and get started. They realize that a decision to sit on the sidelines comes with a huge opportunity cost attached. Lesson: Jump in. Now.