Women are gaining financial independence to an unprecedented degree — they now make up the majority of college graduates, are nearly half of the labour force and are becoming the primary earners in many households.Yet most remain uneasy or uninvolved when it comes to talking about and managing money. — USA Today
A number of women took issue with this dispiriting article. It’s likely these women are in the 22% minority of women cited by the article who are comfortable making financial decisions, or one of the 12% who are experienced investors.
Perhaps they are like my friend and colleague who is a partner at a well-regarded institutional investment firm. When she’s not at work managing a portfolio that consistently outperforms relevant benchmarks, you can find her at home buying and bearing bonds. This friend also studied engineering in college and knows how to code.
But the fact is that in the Wild West of investing, an Annie Oakley is rare — the realm of investing is still very much a dude ranch. While there may be 1 in 5 women for whom learning to invest is simply an exercise in sharp shooting, for the remaining 80%, I suspect it really is their first rodeo. According to the Bem Sex-Role inventory, society considers a woman to be feminine only within the context of a relationship or when she is giving something to someone. Project this image of the feminine ideal into the world of investing and the only “socially acceptable” roles for women are limited — perhaps doing due diligence as a “helper” or writing a check as a donor.
In fact, one of the social entrepreneurs in Fast Company’s League of Extraordinary Women shared with me that she chose to designate her business, a non-profit, because women were willing to make donations hand-over-fist, but they wouldn’t invest. From a financial perspective, this is illogical. A donation means the money is gone; an investment means you may get something back. From an emotional perspective, the decision adds up. When you donate, you are giving something. When you invest, you can expect a return.
So how do we explain the high investing anxiety of four out of 10 women? I suspect because, deep down, they fear it will bankrupt their femininity. But if women don’t feel comfortable handling their own money, it’s unlikely that they’ll feel comfortable handling a P&L for their firm — and if you don’t feel comfortable with P&L responsibility, you’re not going to make it to the top ranks of management.
So if you feel uncomfortable as an investor, here are two bullets to pack in your pistol:
Investing is about financing dreams. Some of the dreams I finance are close to home. As we become fluent in the realm of the coin, money can be much more than a jar from which we pull assets in order to subsist, but rather a storehouse from which we can fund our child’s education, buy a home, assemble the resources needed to write a book, start a business, or, as I would eventually like to, produce a documentary. Investing also finances the kind of world we want. I dream of a world, for example, where there are more and better employment opportunities, people parent well, appreciate one another, and volunteerism abounds. There are companies I can invest in that will help all of this happen.
For example, Intuit helps small businesses to better manage their books — creating jobs. While Isis Parenting educates new parents, RedStamp makes it easier for people to stay in touch, and Catchafire pairs professionally skilled volunteers with meaningful pro bono experiences. Each of these businesses is thriving, in part, because people were willing to invest in them. Financial services professionals may sidetrack us by slinging around financial terms like market cap, P/E, or EV/EBITDA, but investing is ultimately about achieving two goals at once — financing our personal dreams and making a down payment on the world we want.
Investing is about taking stock in you. An important part of growing up is learning to take responsibility for your resources, be they large or small, earned or inherited. You will undoubtedly make mistakes. But as you practice, you will gain confidence and become more comfortable with the idea that real women do invest.
A simple way to begin is this. Say for example, you have saved $10,000. Commit to investing $1,000, which you will mentally label as “tuition for learning to navigate uncharted waters while investing in people’s dreams.” Then, choose a company that solves problems you think need to be solved and/or creates a world you want to create.
Next, do your due diligence (or homework) on the stock. Now a word of caution — don’t let not understanding everything about the investment stop you. Give yourself a time limit of six hours (at most), and then pull the trigger. Trust me, I’ve seen people buy a stock with no more than a one-two sentence tip. You simply need to start. Because investing can be a head game, one requiring you to stare down the imposter syndrome, write down how you feel as you invest. As you write and reflect — and make mistakes — and keep going, you will not only find yourself in charge of your money, you’ll find that you are now in charge of you.
Even with this investment ammunition, like Annie Oakley, you may often be the lone female gunslinger, wondering if you’ll ever feel at home on the range. Only 5% of venture capitalists, 12% of angel investors, and less than 3% of hedge fund managers are women. In time though, you may find that you are becoming an investing sharp shooter. To wit, a study by Hedge Fund Research Inc. found that between 2000 and 2009, hedge funds managed by women produced almost twice the returns of those run by men. John Maynard Keynes once said, “We must have the courage to take limited means, and invest in and encourage others.” It’s high time that we muster the courage to encourage and invest in ourselves.