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Myths about Women and Money (Part II)

Myth #2: Women are not as confident as men when it comes to investing.

But how is investing confidence measured?

Does a more confident investor take more investment risk and memorize their year over year returns?

Does a more confident investor assign a goal to their money and create a plan to achieve the goal?

Could it be men and women just think about investing differently?

It is true that women typically are not high risk investors. But low risk doesn’t necessarily mean low confidence. Women differ substantially from men in how they relate to investing. They don’t want to hear about the growth or comparative performance of different funds; they want information about reaching their long-term goals, like putting a child through college.* Women view money, not in terms of performance, but in what goals it can achieve.

When working with women, we identify their goals and then create a roadmap to get there. This results in financial confidence because they know investing is a means to an end. In turn, our clients know their investments are positioned to achieve their goals, not just a rate of return.

Do her male counterparts view her as less confident because she is not talking about or know her year end returns?

Here’s a sad statistic: Just 20% of female breadwinners said they were ‘very well prepared’ to make wise financial decisions, versus 45% of their male peers.** Maybe this exists because these female breadwinners are speaking with males who talk about performance, versus goals?

Women tend to view investing with a longer-term, non-monetary mindset that balances independence, financial security, and quality of life. Men prefer independent financial decision making that tends to react in response to market trends. Women take more time researching their investments and gather advice from professionals before committing. Women see the world as a network of connections. Men see the world as a competitive place. Which makes them more likely to make decisions based on the need to beat a competitor, which disregards risk. Men are from Mars and Women are from Venus, right?

If you’re not sure of your own money confidence, take our quiz about being Money CHIC.

Fact: Women invest for goals.

Men invest for returns.

*Vanguard Group’s Asset Management & Advice Services Division
**New York Times, January 2013

 

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