By Sydney Sekese, CFP® professional and member of the Financial Planning Institute
I am writing this article on the eve of National Women’s Day. I want to take a moment to acknowledge the significance of this day, which is commemorated in South Africa on August 9th each year. This month serves as a poignant reminder of the tireless efforts and sacrifices made by women. Their patience and persistence paved the way for future generations.
The same patience sets them apart from their male counterparts when it comes to investing. Studies have consistently demonstrated that women tend to be more patient and less impulsive when making financial decisions. This trait allows them to adopt a long-term perspective, focusing on steady growth rather than quick gains. As a result, women are more likely to:
1. Set clear financial goals and stick to them
2. Diversify their portfolios to minimize risk
3. Avoid frequent buying and selling, reducing transaction costs
4. Ride out market fluctuations, rather than making emotional decisions
This patient approach leads to several benefits, including:
1. Better investment performance: Women’s portfolios tend to outperform those of men, thanks to their buy-and-hold strategy.
2. Reduced stress: Women experience lower financial stress levels by avoiding impulsive decisions.
3. Increased financial security: Patient investing helps women build a stable financial foundation.
In contrast, men often exhibit a more aggressive investment style, characterized by:
1. Overconfidence in their investment choices
2. A focus on short-term gains
3. Frequent buying and selling, leading to higher costs
While these differences are general trends and not absolute, understanding the patient investor mindset can benefit everyone. By embracing a more patient approach, individuals can make more informed financial decisions, leading to greater economic stability and success.
While some women may naturally tend towards patience, it is largely a skill developed through experience, learning, and practice. By acknowledging and building on these factors, women can cultivate patience and become successful investors.
A well-known author of the “Psychology of Money” states in his book that financial success is not a hard science. It is a soft skill, where your behavior is more important than your knowledge. Women’s consistent, patient, and disciplined approach to investing and financial planning can lead to greater success than merely possessing financial knowledge
In conclusion, women’s patient approach to financial planning offers valuable lessons for investors of all genders. By adopting a long-term perspective and avoiding impulsive decisions, individuals can achieve better investment outcomes and greater financial peace of mind.
