Why Women Should Be More Confident Investors

While women are working towards closing the gap on earning as much as men are (on average), their financial wants and needs remain very different. Women value financial peace of mind far more than accumulating big wealth, while men are more willing to take big risks for the chance of big gains.

I recently held a webinar for Nasdaq, “How to Fearlessly Make Money in Stocks,” focused on the female investor, and in my research I discovered that 72% of women don’t feel confident that they have the knowledge to make prudent financial decisions. The fact that so many women reported not feeling comfortable investing was at first shocking to me, but in many ways understandable. Before I started investing in stocks, I, too, was intimated by investing and the Wall Street jargon I didn’t understand. In reality, however, there are simple principles to follow that can make investing easy. My goal in hosting webinars is to help women build their confidence to invest successfully.

According to a CNN Money article on female investors:

“Already 40% of women out-earn their spouses…and nine in 10 women are expected to be the sole financial decision maker for their household at some point given that women are staying single for longer and often outliving their partners.”

Living longer also means that women are more likely than average to inherit wealth or businesses at some point in their lives. As women continue outliving, and sometimes out-earning, their spouses, making profitable investment decisions is hugely important.

What do women, in particular, want out of their financial investments? Clearly, both men and women want to make money, but they have differences in their financial wants and needs. I found that many studies show that women tend to be more focused than men on financial security, and favor stability over the risk of making or losing big money. They cite lacking confidence in financial decision making despite the fact that some studies show their investments to be less volatile and better performing on average, according to studies by LPL Financial. Furthermore, they want more information and education to empower themselves so that they can make their own financial decisions. And yet, 72% of women report not feeling confident in making investment choices. That is a big problem as women are gaining more financial power while living longer, and remain worried about achieving financial security and supporting their families.

As I discuss in my webinars, which I encourage women to attend if they find themselves in that 72%, one the biggest pitfalls when it comes to investing is emotional investing. This is what clouds judgement and influences people to make irrational decisions like getting spooked into selling too early or holding onto losing stocks they hope will climb back up.

In order to avoid this, you need to look at the actual factors affecting the stock price. Chaikin Analytics, for example, uses an algorithm that combines 20 important factors, including earnings performance, financial metrics, and expert opinions (I like to look at what the professional investors and insiders are doing) to grade stocks. These factors are distilled into a simple rating known as the Chaikin Power Gauge. What’s great about this is its simple display as a color-coded rating from red (bearish) to green (bullish), showing you where the stock is headed over the next 3-6 months so you can find the winners and drop the losers before the price moves. When you break down investing into a simple methodology like this, it becomes navigable and, more importantly, lucrative.

Simply using reliable tools and breaking down investing decisions into different steps makes investing understandable. Knowledge about financial decisions is what will help women, as they continue to close the wage gap and outlive their spouses, build the confidence to make money in the market successfully, and gain financial peace of mind. I am living proof you don’t need to have a financial degree or be a professional Wall Street trader to be successful if you have the right methodology and tools.

Click here to register for one of Sandy's upcoming “Novice to Knowledgeable” webinars on how to build a killer portfolio and invest with confidence. The article “Why Women Must be Fearless Investors” originally appeared on Sandy’s byline page on Nasdaq.com. Sandy started investing in 2012 and now consistently outperforms the S&P 500 and most money managers.

Sandy Chaikin is a member of the DailyWorth Connect program. Read more about the program here.

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