Thaneweb: How can female investors avoid being influenced by male investment patterns

February 2022

There is ample research to indicate that women lack confidence managing investments on their own and steering clear of the influence of the investment patterns of men may be a challenge for many.

“There is no need for you to invest in equities or any equity-linked securities. They are too risky and it's better if you stick to fixed income investment classes that carry minimal risk,” bellowed Natasha Singhal’s (name changed) father. Singhal, a 23-year-old graphic designer is self-employed and after an exhilarating first few months of tasting financial independence, has now embarked on the journey of saving and investing for her goals.

“I started working as a freelance graphic designer right after finishing my post graduation. The first six months went by in the blink of an eye – thankfully, I did not face the difficulty of there not being enough work or income which most freelancers face in the initial days. In the first six months, I did not keep a track of my money – I was too caught up in savouring the experience of not being accountable for my expenses. However, after six months, my father nudged me to start being mindful and embrace a disciplined approach to saving and investing,” Singhal narrates.

While Singhal sought her father’s help in grasping the nuances of personal finances, she meandered through different corners of the internet to fill the gaps in her knowledge. And the exploration made Singhal realise that age and gender have a strong bearing on the way people approach investments. As time progressed and Singhal became more adept at managing her finances by herself, these differences became clearer.

“When I had just started investing, my father’s words were the gospel truth for me. My mother was never in the picture when it came to financial matters. Consequently, I was wired to think that managing money is something that comes naturally to men and based on that conviction I invested my earnings in all the asset classes that my father chose for me,” Singhal says. However, with every confident stride that she took on the learning curve, it became increasingly clear that her father’s investment style was slightly dated and in the long run would not be suitable for her.

She explains, “Like most people of his generation, my father was extremely comfortable in channeling his money in safe investment instruments and had a lopsided perception of anything that carried risk. I understand the reasons that led to these notions but investments cannot be straitjacketed into black and white areas – what is poison for me may be an elixir for someone else.” Singhal is trying to wean away from a set-up where she had left the task of portfolio management on her father to being self-reliant in managing her finances.

In India, women have been kept eons away from financial inclusion and hackneyed notions of men being better financial managers continue to make it hard for women to be in charge of their finances. Yes, things are changing for the better with the younger cohort of educated women acknowledging the importance of learning to manage money without seeking help from their husbands, partner, fathers or siblings. Yet, their own societal conditioning replete with patriarchal tropes, makes autonomy in investment decisions a distant dream. And those who are able to achieve it, continue to struggle because the lens with which they view investments and money decisions tends to be heavily coloured by the ‘male gaze’. There is ample research to indicate that women lack confidence managing investments on their own and steering clear of the influence of the investment patterns of men may be a challenge for many.

“There is no need for you to invest in equities or any equity-linked securities. They are too risky and it's better if you stick to fixed income investment classes that carry minimal risk,” bellowed Natasha Singhal’s (name changed) father. Singhal, a 23-year-old graphic designer is self-employed and after an exhilarating first few months of tasting financial independence, has now embarked on the journey of saving and investing for her goals.

“I started working as a freelance graphic designer right after finishing my post graduation. The first six months went by in the blink of an eye – thankfully, I did not face the difficulty of there not being enough work or income which most freelancers face in the initial days. In the first six months, I did not keep a track of my money – I was too caught up in savouring the experience of not being accountable for my expenses. However, after six months, my father nudged me to start being mindful and embrace a disciplined approach to saving and investing,” Singhal narrates.

While Singhal sought her father’s help in grasping the nuances of personal finances, she meandered through different corners of the internet to fill the gaps in her knowledge. And the exploration made Singhal realise that age and gender have a strong bearing on the way people approach investments. As time progressed and Singhal became more adept at managing her finances by herself, these differences became clearer.

“When I had just started investing, my father’s words were the gospel truth for me. My mother was never in the picture when it came to financial matters. Consequently, I was wired to think that managing money is something that comes naturally to men and based on that conviction I invested my earnings in all the asset classes that my father chose for me,” Singhal says. However, with every confident stride that she took on the learning curve, it became increasingly clear that her father’s investment style was slightly dated and in the long run would not be suitable for her.

She explains, “Like most people of his generation, my father was extremely comfortable in channeling his money in safe investment instruments and had a lopsided perception of anything that carried risk. I understand the reasons that led to these notions but investments cannot be straitjacketed into black and white areas – what is poison for me may be an elixir for someone else.” Singhal is trying to wean away from a set-up where she had left the task of portfolio management on her father to being self-reliant in managing her finances.

In India, women have been kept eons away from financial inclusion and hackneyed notions of men being better financial managers continue to make it hard for women to be in charge of their finances. Yes, things are changing for the better with the younger cohort of educated women acknowledging the importance of learning to manage money without seeking help from their husbands, partner, fathers or siblings. Yet, their own societal conditioning replete with patriarchal tropes, makes autonomy in investment decisions a distant dream. And those who are able to achieve it, continue to struggle because the lens with which they view investments and money decisions tends to be heavily coloured by the ‘male gaze’. There is ample research to indicate that women lack confidence managing investments on their own and steering clear of the influence of the investment patterns of men may be a challenge for many.

Singhal opines that her curiosity and the desire to create corpuses for her goals helped her in regaining control over her finances. “I see my female friends completely relegate control over their finances to their partners or the male members of their family and then forget about it because there is an innate sense of security that their money is in good hands. That is where the problem lies. Women should continually strive to learn and be engaged in their money matters. That is the best way to keep learning and with time it will become easier for you to decode what strategies work for you and what doesn’t,” she says.

She also recommends choosing investments that do not pose liquidity problems and are easy to understand and manage. “Picking complicated investment instruments will create ample room for others to wrest control from you especially if you are a new entrant in the game of investments. You will be heavily influenced by the opinions of others. Similarly, lump sum investments that come with a lock in period leave you little room for diversifying and this is especially true in the case of women with limited incomes. I have been investing in mutual funds through SIPs for a while now and that has been a game changer. Liquidity is never a concern and I can choose funds with varying risk levels and investment timelines for different needs,” Singhal says.

Preeti Zende, founder of Apna Dhan Financial Services says, “The basic thumb rule of personal finance is that it is personal and it should always be personalized. But, we are often influenced by the choices of our friends, colleagues, relatives and sometimes even strangers whom we may have found on social media. This tendency is more prevalent in naïve investors, especially women investors who tend to be greatly influenced by their fathers’, brothers’, or husbands’ investment styles. This is so because they may lack knowledge and confidence to deduce their own investment styles based on their preferences, risk-taking ability, and their financial goals.”

Zende says that gender has a bearing on the basic nature of men and women and that should be borne in mind when picking investment classes. “Women should refrain from blindly following the investment styles of men without gauging the pros and cons. Any investment process should start with identifying financial goals and then selecting suitable products to achieve those keeping in mind the timeline and risk-taking abilities. An example of an asset class that can suit every type of goal is mutual funds.”

Zende cites an example where the investment style of men differs inherently from that of women is that most men prefer to take more risks and churn their portfolios frequently to book short-term profits. “Women who copy paste those moves without much deliberation may end up incurring losses. If you are risk-averse and are aiming at long-term wealth creation should select index funds with flexi-cap funds. Small caps should be avoided if you cannot digest its volatility. For short-term goals stick with Liquid and ultra short-term debt funds. Avoid experimenting with credit risk funds or short/long term debt funds as they carry higher credit risk,” she recommends.

Key takeaways

- If you are finding your bearings in the arena of investments and are being guided by the men in your family, do not forget to keep asking questions no matter how inane they may seem. You can then back it up with your own research to infer whether a certain investment move is suitable for you.

- Professional advice is the way to go if you feel lost or have an inkling that something is off when your investments are being managed by someone else.

- Take stock of your goals, your liabilities and your risk-taking abilities from time to time – the success.

- If you are risk-averse and are aiming at long-term wealth creation should select index funds with flexi-cap funds. Small caps should be avoided if you cannot digest its volatility.

Source: www.hindustantimes.com

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