How Women’s Biggest Investing Weakness Can Become Their Biggest Strength (Once They Start)

Today, I don’t want to talk about the gender wage gap. I don’t want to talk about how fewer women are saving for retirement compared to men. I want to talk about why…

Women are better investors than men.

Woohoo! Grab your thongs and your lipstick, ladies, we’re heading down to Wall Street to reclaim what’s ours! Cue Shania Twain

Let’s go, girls.

Realistically, I know there’s data that supports this claim, but you can really make data say anything you want it to.

And when you read the articles about why women are better investors, it usually comes down to two things:

• They trade less.

• They’re less confident.

Good news, Cheryl, your self-esteem problems might help make you RICH!

Here’s the crazy thing: The very trait that can help make women successful once they start investing is the thing that keeps them out of the game in the first place

You know that cliché (but probably valid) corporate saying that women won’t apply for a job unless they’re overqualified but men will apply for the same job despite being objectively underqualified? It works a little bit like that.

Our male counterparts have been ingesting the societal equivalent of pop-psychology hit “YOU ARE A BADASS” for their entire lives, and they have a little bit of overconfidence to show for it.

That’s because, most of the time, doing nothing in investing is the exact right thing to do

Hubris is an investor’s arch nemesis.

So if you’re a woman reading this and you’re like, “I don’t really know what I’m doing! I’m not confident in my ability to make money in the market.”

Congratulations, you have the right attitude to be an index investor.

But that’s only if you can get over the hump of worrying that you don’t know what you’re doing or that you’re not good enough.

People who are interested in investing

Some are men, some are women. Some work in finance, some do not.

A lot of women express fear of starting. Very few men do.

Ladies, muster the confidence of a college freshman boy going to his first fraternity party in a new Vineyard Vines button-down and a handle of Kentucky Gentleman in the backseat of the F-150 (anyone else go to Alabama? Just me?) then open and fund your account – then immediately resume your cautious, risk-observant, “I’m no expert” attitude.

Painting with a broad brush

Obviously, the generalizations I’m making are intended to be humorous in nature – I talk to plenty of men who don’t act like brazen, day-trading 19-year-olds. Men who are thoughtful, conscientious, and interested in learning more.

I also talk to overconfident women (and am, myself, sometimes an overconfident woman) who think they’re capable of beating the market over time because they went to Harvard or work for Goldman Sachs.

That pendulum certainly swings both ways, and gender isn’t always a determining factor of your attitude toward risk.

But if we look at the data in its totality; if we look at “women as a whole” and “men as a whole,” we can see that women tend to get better results for the exact reasons they usually wait too long to enter the market

Embrace your own humility. It’s something I’m reminded of every single day, sometimes at hilariously well-timed intervals. The day after I posted a flow chart that made me feel like Gandhi with a highlighter, I stumbled upon an Instagram account that reminded me I know basically nothing. soft smiles

That interplay between humility and confidence is a perfect representation of life in general, not just investing – but knowing when to deploy each trait can serve you well. Be confident enough to get some skin in the game, and humble enough to know that investing is hard, ever-changing, and a greed trap that will chew you up and spit you out if you enter thinking you can master the chessboard better than everyone else.

Get started investing today

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Betterment encompasses the ethos of “open an account, tell them about what you’re saving for, put money in, and they’ll handle the rest.”

It’s how I recommend people start investing, especially those of us who recognize they’re probably underqualified to pick their own funds.

With Betterment, you merely choose an investing goal, answer a few questions, deposit cash, and allow the algorithm to work its magic. Based on your goals’ details, Betterment can invest your money in a variety of low-cost, diversified ETFs—great for getting skin in the game then doing nothing.

Disclaimer:

Investing involves risk of loss and performance not guaranteed. Just my opinions, not advice. #sponsored