Women and investing
03 May, 2022

My name is Clara, and I am the Co-Founder and Head of Growth at One-Signal. Unlike many (women), I was fortunate enough to grow up in a household where financial literacy was highly valued. Since early on, I was taught about money management, the stock market, and the importance of long-term investing. This gave me a completely different approach to the financial industry and investing my money. It was always clear to me that finance and investing was more popular among men than women. However, while working for various financial institutions, the gender imbalance became even more apparent to me. This disparity also affects how young women perceive investing and the stock market.

Many women believe that the stock market is only for men because they are taught to save from a young age, whereas men are taught to invest their money. In fact, in the United States, more than half (56 percent) of people currently invest in the stock market. Within this group of 56 percent, 48 percent are women, while 66 percent are men. In the United Kingdom, one in every three men invests, compared to one in five women.

Women and financial literacy

Financial literacy is a combination of financial, credit, and debt management knowledge that is required to make right decisions. It includes paying off debt, creating a budget, and understanding the differences between various financial instruments. Furthermore, financial literacy enables a person to be better prepared for specific financial roadblocks, lowering the likelihood of personal economic distress. There are numerous resources available on the internet, and it is never too late to begin.

The lack of financial literacy is one of the reasons why women don’t invest in the stock market. Several surveys have shown that women are less likely than men to correctly answer simple financial knowledge questions, more likely to respond that they don’t know the answer, in addition to rating themselves lower in terms of self- assessed financial literacy. Furthermore, according to a 2021 survey, 69 percent of surveyed women say they have learned how to choose investments, compared to 83 percent of men.

Beyond financial literacy

There are several other factors influencing women in the stock market: only 28% of women say they are confident about investing their money, compared to 45% of men. When it comes to investing, women experience more anxiety and confusion than men: According to the same survey, women are more likely than men to be anxious (29 percent vs. 22 percent) or confused (23 percent vs. 17 percent) when considering investing. Men, on the other hand, are far more likely than women to report feeling confident (41 percent vs. 22 percent).

Other factors include intentionally ambiguous investment language and overly complex jargon, a lack of female investor role models, and a perception problem that leads to unconscious bias.

When women invest, they outperform

Despite investing less, there’s evidence that when women do invest, they outperform men. It is proven, that when it comes to investing, women are more patient than men, are less likely to gamble as they tend to be more risk-averse, are less impulsive and think more about the long term. According to Warwick Business School analysis, women outperform men when investing by 1.8 percentage points over three years. Moreover, Fidelity has found that female investors outperform their male counterparts by an average of 40 basis points per year. Women should not hide behind their savings accounts, and we at One-Signal want to help.

Be the change

I believe that the first step is breaking the stigma associated with our financial goals, because money and investing are not topics that we as women have ever discussed. Even though most of us frequently discuss money in terms of how much goods cost and how much we spend daily, many of us still rarely discuss our future plans in terms of what we want our money to do for us or what our financial goals are. Many people overlook the emotional value of money conversations because we see money to protect and provide for our families.

Secondly, it is important to debunk financial myths, such as “it’s only for men”, “I need to be good at maths to invest” or “it just simply is too difficult”. These, among other things, are the most common trading myths, and we've all heard them at some point. Most people are hesitant to invest in the stock market for the first time. In addition to being blinded by myths, potential investors who lack financial literacy miss out on excellent opportunities to improve their finances. The next step is to start educating oneself.

If a housewife throughout the centuries was able to manage scarce resources and decide what she needed to buy and when for her family, one would attribute a high level of economic instinct to her. This economic instinct that has been passed down through generations is something we can use just as much for large-scale decisions. So, we women don't lack skills, we lack determination and confidence.

 

How One-Signal can help yu

With One-Signal, we have started a series of small E-books, which are free to download on our website. One series focuses on demystifying financial jargon, as I believe that financial literacy is the first step to investing. The second series is about debunking trading myths, such as “trading is for men” or “I need a lot of money to start trading”. Additionally, One-Signal provides the only information needed to trade every day, with one word in one email per day – “long” or “short”. This makes One-Signal the perfect trading tool for individuals who want to cut through the noise in the market, don’t have enough knowledge and time to make thorough research. Moreover, individuals who prefer a completely automated approach can use our execution services. This means, that all they need to do is deposit their money and we handle the rest!

 

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