Why It's Time to Invest Like a Girl

October 3, 2017

Warren Buffett, the second richest man in the world, is also one of the world’s most astute investors (no surprise there). How does he do it? Well…he invests like a girl. It’s true—there’s even a book about it. That means he ditches his “traditional” male attributes of bravado, ego, and massive risk-taking, for thorough research, a calm demeanor, and a lot of patience. In other words: qualities generally ascribed to female investors.

How do male and female investors differ?

Studies have shown that men tend to be overconfident in their investing skills, whereas women readily admit to being less confident in their skills, but more skeptical of investment schemes. This leads them to ask more questions and perform more research before committing their money.

Does this mean that women are more conservative investors? Not at all. Instead, research has shown that gender diversity makes women more risk aware than men; they also ask more questions than men. Women will take just as big of a risk, but they want to quantify the risk, and not be caught by surprise with an unknown outcome.

Planning horizons are typically much longer for women. While men seek instant gratification and are typically more results-focused, women are content to let the process evolve. For them, patience comes naturally, and remaining on the correct path is more important than checking off arbitrary milestones.

Women are also fundamentally different in their investment needs.

Women tend to have a more variable career path. Having babies, raising families, caring for elderly family members, and supporting spouses’ career paths can all interfere with women’s earning potential. As a result, contributions to social security may be irregular, and efforts to save are often times indeterminate and neglected.

And, let’s not forget that wage discrimination is still a thing. This means that a woman is not able to save as much for retirement as her male counterparts, even if she is putting away the same percentage. This reality is further complicated by the fact that women tend to live longer, meaning that even though they’re not able to contribute as much, they’re actually more likely to need more in their retirement years.

So, where does that leave us?

Women are not only naturally equipped to succeed at investing—their futures depend on it. So, to feel confident and be successful in the investment world, it’s about time you ditch the one-size-fits-all, male-centric precepts, and invest like a girl. That means:

  1. Do your research, and don’t be afraid to ask the right questions.
  2. Be confident in your cognitive ability to make smart decisions.
  3. Have the foresight and patience to live with your investment decisions, and you’ll be able to rest assured that your savings will support you for a good long time.