Here’s the thing about women: We’re patient. Maybe it’s genetic. Maybe it’s because we’re used to waiting for what we want. Maybe it’s because we realize that good things take time to become great — whatever the reason, when it comes to investing, patience is a significant advantage.
In fact, there is no reason why more women aren’t wealthier. By most accounts, women control somewhere between 30% and 40% of global wealth. That’s not shabby, but it’s fairly low considering that women are natural investors. We’re well educated (in the U.S., we’re more likely to go to college and graduate from college than men); and we’re good at saving money (better than our male counterparts); and when it comes to investing, we commit to a plan better than men, and we’re less likely to move our money around in market fluctuations, which can be a very expensive habit.
By contrast, men are notoriously trigger happy and overconfident as investors; they lack patience and expect immediate returns. According to one study, men traded 45% more than women, and all that trading reduced men’s returns by 2.65% a year, up sharply over the 1.72% in reduced returns women saw from excessive trading. Women’s greater patience sounding more convincing now?
So, If Women Are Such Great Investors, Why Don’t More Women Do It?
In part, it’s because the financial services sector (i.e. money managers, investment banks and retail banks) has long overlooked and neglected its female customers. A damning report from the Boston Consulting Group a few years back, for example, showed that women were very unhappy with the financial services they received. Of those surveyed, 55% felt that wealth managers could do a better job of meeting women’s needs; and 24% thought that private banks could significantly improve how they serve women. The problem, they said, was that men got more attention, better advice and even better terms on deals. (Not to mention, some women found banks’ “pink” marketing campaigns condescending and insulting.)
As one woman surveyed said, “What banks need is a revolution like the automotive industry had: to finally understand that women not only sit in the cars but also choose, buy and drive them.” Some businesses have caught on.
Case in point: Ellevest, a revolutionary women’s investment platform started by Sallie Krawcheck, former Citigroup CFO and longtime Wall Street exec. The goal of Ellevest is to close the gender investing gap.
Why We Should All Invest Like a Woman
Krawcheck says the idea for the business came to her after an a-ha moment when she realized that the investing industry — a by-men-for-men business — was systemically keeping women from meeting their financial goals. It’s a particularly painful problem given that women’s financial needs are very different from men — they tend to be disproportionately affected by life events (having children, divorce, losing a spouse, and so on) and earn, on average, less money than men. Because of these reasons and more women need to invest their money early so they can benefit from compounding. But, how and where do you start, you may ask?
All About Your Goals
Sometimes, a starting point can really come in handy. Think back to when you first applied to college. The whole idea of applying and getting in, visiting schools, packing for school, and graduating was all daunting, but it all started with a plan. You needed a plan and goals set in place to succeed; investing is no different. When it comes to investing like a woman, Ellevest can help you take the guesswork out of the investing and help you invest in your biggest goals.
But that’s just the beginning. Customization matters a lot at Ellevest too: They customize each of your investment portfolios to each of your goals, and they customize your financial plan to you. Which is why they’ve also given you the ability to customize your goal targets, your timeline for achieving them, and the rhythm with which you invest your money to get to your goals.
The cost to draw up a financial plan with Ellevest? Nothing. The company wants every woman to have a plan — and that’s why theirs is free. Plus, it takes less time to generate a plan than running a mile. You can save your Ellevest plan, come back to it, adjust it, or share it, whether you invest with Ellevest or not.
Disclosures: We’re excited to be teaming up with Ellevest to start this conversation about women and money. We receive compensation if you become an Ellevest client.