Mutual Fund Industry
| March 07
Whether you look at investment banking teams, people managing mutual funds or other products, the one myth which has been perpetuated is that investing and men is the eternal match. But, when you put this idea under close scrutiny, does it stand ground? Not really.
For generations, women in India have been the financial controllers of households. Considering the intensity of efforts being made at financial literacy and awareness, if anything it should have just accentuated the innate financial sense that women possess.
Then, why do women shy away from investing? Equity, through the route of mutual funds, is one of the easiest assets to start investing in (for reasons like low entry ticket size and being fairly liquid). It is then a commentary on us as a financially gender unequal society that only about 24% of the 1.09 Crore demat accounts held by CDSL (Central Depository Services Limited) were those of women. This would include quite a few inactive and dormant accounts as well as those operated by others (rather than the holder herself).
In our attempts to get more inclusion into investing, here we try to break down 7 myths and reasons women often give to themselves as a reason to not get into it at all:
Myth #1: My father/husband/brother invest my money because men are better at it
If you have someone in your family to invest for you, then it is a great learning ground but only that. You should take that opportunity to understand their investing strategy, learn from it, read up some more and then put in your investment strategy in place.
As for the “men are better at investing” you must read the book – “Warren Buffet invests like a girl” by LouAnn Lofton. In the book, Lofton concludes that Warren Buffet’s investment style shares a lot with traits shown by women investors (as brought out by research). Forbes Magazine
describes it as such:
Like Buffett, Women are more likely to have a calm
temperament, a longer-term outlook, do more research,
trade less and remain steady under pressure, says Lofton.
And what does Buffett think about the claim? " I plead guilty,: he said.
Wells Fargo Investment Institute in their recent research
about women investors also talks about the 3 most important traits that make women more successful – Patience, discipline and willingness to learn.
Myth #2: Finance and investment is complicated
It sure is and the jargon around it does not make it easier. But this would be just one more of the other complicated things that you do with ease in your daily life – be it your job, running a house, raising kids etc. If you can do any of those or more, then managing money and investing it is far easier. While this blog makes a humble effort at breaking down the basics and the recent happenings in the world of finance, if videos work better for you hop on to Youtube and there are more than enough video tutorials to help you understand. Devote some time to learn the basic concepts and the return on investment on this will be manifold. Here’s one of those simple channels to start with: https://youtu.be/h9yozG7iy2U
Myth #3: I don’t earn enough to save
Considering the gender wage gap, we sure understand the feeling of never having enough money. However, it really is all relative. Saving is a mindset. As for investing, you can start with as little as Rs. 1,000 per month. If that also sounds like too much to put aside, start putting a Rs. 20 note in a piggy bank every day the way we did when we were kids. Gradually you will build up on the “habit” of saving and it will become effortless.
Myth #4: I am not good with numbers
This fact of low self confidence in own abilities is a defining trait among women globally. Wells Fargo Investment Institute conducted a study a year ago (Aug 2016) which showcases the fact that women have less confidence in their investing skills than men even though the same study shows that the results of women investing show a lower variability than men. And even if you think you are not good with numbers, there isn’t much of mathematical ability required while investing. A bit of common sense and basic tracking will get the job done far better than any complex calculations.
Myth #5: I would rather spend my money than wait to spend it
In this era of social media, where every breath and every event is splashed online to reactions from all around the world in a jiffy, instant gratification has surely spread like a bug. This impulse shows itself in our financial matters as well. The temptation to spend money instantly enough on something as lucrative as a holiday is far stronger than figuratively locking your money and patiently watching as it takes the hits of the market or even as it grows at a distance from you. However, if you are able to instill the discipline of squirreling away and investing small sums of money every month, it will become an effortless habit that will yield rich gains.
Myth #6: Cash in accounts and deposits better is than taking risk
Yes, market investments are subject to risk. But, in an era where we have learnt to live with far bigger risks like coronavirus, falling bridges, terrorist attacks and the likes why would you not invest? Each and every act that we do in life comes with an element of risk and investing is no different. However, if done with some research and care, investing does hold out the possibility of enough benefit to counter the risk.
Myth #7: I don’t have the time to invest
For a lot of people fearful of entering the markets, investing in equities means constantly being online ready to click on the “buy” or “sell” buttons, the minute some hot news or tip makes itself known. However, a number of studies show that one cannot time the market and trying to do so comes with its own costs – higher brokerage costs with more frequent trades and higher short-term capital gain taxes to pay when you trade within an year. A far more fruitful and prudent approach with respect to time and returns is to invest in good quality mutual funds with a long term horizon of atleast 3 years which will help weather the shocks and better enjoy the gains from the market movement which all require mostly a one-time initiative and can be done quickly enough. One of the points of inertia which often becomes a reason for women to keep delaying this matter is also account opening and just starting the whole process. That is where online services like Moneyfront ensure you don’t need to set any appointments but with a few basic documents can start the process, sitting at your home.
On this Woman’s Day, you have the power to make your contribution to this movement of empowering women. Start your journey or initiate a woman in your life to get over the fear and just gradually ease into the wonderful world of investing.