It is a common assumption in the investing world that women are more risk averse than men. Compared to men, women are often portrayed as conservative and more fearful when it comes to investing. However, a recent study about women investors in angel funds pokes holes in this common stereotype.
The 2011 study from Oregon State University published in the July 2011 issue of the journal Entrepreneurship, Theory And Practice says that the proportion of women investors is directly related to the number of investments made by the group of angel investors. The study goes on to say that when women made up 10% or more of the group, increased investments were made. This means that although women are often viewed as more cautious when it comes to investing, in a group where there is a large presence of women, their investment activities increase.
According to the researchers, when there is a small amount of women in a group of angel investors not many venture to take part of the investment, but if there is a larger number of women in the group in proportion to men, they become more confident and invest more. That's good news! This means women are not all that risk averse, we just need a little peer support.
Is it all that bad to be risk averse? When reading studies of women investors, we might tend to believe that it's a negative thing to be so conservative, but in actuality it's only "bad" when it negatively affects your portfolio; if there are so many conservative stocks that your portfolio is not growing in value at a good pace, for example. The best way to strengthen your investments is to diversify with a combination of risky and conservative stocks. So, taking a few risks here and there, as well as making conservative choices, is a healthy way to maintain your portfolio's strength.
Overall, women look for stability. They are not so much interested in accumulating wealth just for the purpose of increasing their funds. They want to be economically stable and have enough to take care of themselves and their family. According to a study from the Catherine Avery Investment Management, women are holistic thinkers who are more concerned with quality versus quantity.
Women also earn more now than ever before. According to the United States Census Bureau, roughly 43 million women participated in the U.S. workforce in 2009. Around the year 2000, more women, ages 25 to 29, were achieving Bachelor's Degrees. According to the Bureau of Labor Statistics, the share of women in the labor force grew from 30% in 1950 to almost 47% in 2000. By the time 2050 rolls around, the number of working women is projected to reach 92 million.
The Bottom Line
With these figures, there is no question that more women will be getting more involved in managing their money and will be getting more in investing. To meet this growing need, there are more groups geared towards helping women learn and get more involved with investing. A quick Google search on "women investment groups" results in numerous organizations aimed at getting more women involved. These are gaining in popularity, because they bring a sense of camaraderie. Women have fun, share similar interests and learn about investing stocks together in these groups.
Another big trend is the number of women starting blogs that talk about investing, managing money, personal experiences on how they got out of debt, meeting savings goals, ways to cut back on expenses and managing a career, motherhood and the household budget. With these growing trends, it's not hard to believe women will gain more confidence both in the workforce and in the investing world.