Picture: 123RF/DMITRY PETROV-KORSUKOV
Picture: 123RF/DMITRY PETROV-KORSUKOV

Although the financial planning and investment industry is dominated by male players, women come up trumps when it comes to financial planning and investing. They tend to make better investment choices.

A study by Warwick Business School in the UK found that women investors, on average, achieved an annual gain of 1.94% better than the FTSE 100.

The difference was attributed to two factors. First, that women made fewer trades than men did and tended to stay with stock choices once made. And second, once they realised that they had made a bad choice, women were far quicker to cut their losses and sell rather than hold on to a losing investment.

This research ties in with findings by the international financial services firm Fidelity, which says women investors avoid risk, are more patient and are able to focus on their long-term investment strategy.

Women need to guard against being too risk-averse, too cautious

Over the years, I've watched many clients build investment portfolios and use their wealth to add meaning to their lives. Here are my winning tips based on the financial behaviour of women.

Don't try to play the guessing game

The adage says "it's not about timing the market, it's about time in the market". This works in favour of women, who follow the general trend and make fewer trades than men over the same period.

Women are genetically predisposed to be nurturing and sustain long-term relationships for the benefit of the family unit. This willingness to make a commitment carries over into their finances and they are more likely to stick to a long-term financial plan or investment strategy with a focus on the end goal.

Always have the big picture in mind

As nurturers and matriarchs, women are used to multitasking and taking many different factors into account when making decisions.

Whether it's keeping track of family schedules, meal planning, or balancing a career and children, all women have an innate ability to keep several different things in mind when making choices.

This flows into their financial planning, where they can keep their family and life plan in focus and align these with their financial plan to achieve a synchronised outcome.

1.9

Is the average annual outperformance of the FTSE 100 achieved by women investors, according to a study by Warwick Business School in the UK

Plan for longevity

Women tend to live longer than men. According to Stats SA, South African women are expected to live six years longer than their male counterparts. This means that if you're a woman, your retirement planning should ideally take an extra 10 years into account.

While men may be criticised for taking too much risk, women need to guard against being too risk-averse, being too cautious. Taking risk and including equities in a portfolio are important parts of any long-term investment strategy.

Equities will help you beat inflation

You need to consciously account for the time taken off from work to raise a family when you are drawing up a retirement plan. While you're a mother and not contributing towards a pension fund or retirement annuity, you can start a discretionary retirement fund, and continue to make contributions so that there's no hold on your long-term plan - and you continue to benefit from the magic of compounding investment returns.

As key decisionmakers, whether in a single-income or double-income household, women today have a responsibility to ensure that their financial choices are the right ones for them and their families.

A Merrill Lynch study showed that 81% of the women surveyed felt that financial education should be included in the school curriculum. And maybe that is where the change needs to happen - by taking responsibility for your own finances, learning how to manage your investment and, most importantly, educating the next generation so that they are financially empowered.

Take heart, as a woman you might just be better at investing than you thought.

Hugo is the director of Sterling Private Wealth and Financial Planner of the Year 2018