Build on Your Investing Confidence
Although confidence is rising among women, they still feel less confident than men when it comes to making investment decisions (59% of women say they’re very or somewhat confident, whereas 78% of men say the same). Even with this rise in confidence, women feel more anxiety about losing money on investments (51% say they’re strongly or somewhat anxious) and they are less optimistic than men that they will be able to achieve their investment targets (only 39% say they’re very or somewhat optimistic). Women also have consistently lower financial knowledge than men (56% have low knowledge compared to only 38% of men). But did you know this hesitation and instinct to pause can be a good thing?
Take, for example, that men are more likely to be speculative investors – a behaviour that’s correlated with higher risk. Among women, we see consistently less speculative-type investing behaviour.
Women also tend to outperform men by periodically gaining higher returns because women avoid high-risk trends, they stay calm amid volatility, and they take a more passive approach to investing. While it’s true it wouldn’t hurt women to gain more confidence in investing, they don’t need to be overconfident either because they already have good instincts when it comes to making smart investment decisions.
So try building on your investing confidence. You can do this by getting comfortable with risk.
Investment risk is the degree to which you’re willing to lose some or all of the money you’ve invested. Investors take risks to earn dividends, interest, or capital gains to increase the value of their investments over time.
All investments come with risk. Generally, the higher the potential return an investment might offer, the higher the risk.
Diversification and Asset Mix in Focus: One way to help reduce risk in your investment portfolio is through diversification. Diversification doesn’t necessarily make you more money or stop you from losing money; it simply means not putting all of your eggs in one basket.
If you hold just one investment and it performs badly, you could lose all of your money. If you hold a portfolio with a variety of different investments, it’s less likely that all your investments will perform in the same way.
In a diversified portfolio, you hold different types of investments so that if there is a downturn in some investment categories, you have other ones that can help cushion the impact. Therefore, the asset mix you choose is important to the overall risk and expected returns of your portfolio.
The right asset mix can help balance risk with your expected rate of return on your investments. It should fit your risk tolerance, let you access money when you need it, and provide the growth you need to reach your investment goals.
Your asset mix can change as your needs and goals change.
Building Confidence by Building Knowledge: Becoming a confident investor doesn’t happen overnight. It takes time and willingness to learn. Take advantage of our vast library of information as your one-stop-shop to help build investing knowledge so you can make informed decisions.
Suggested Reading
- Watch – Get Started with Investing
- Read – Types of Investment Accounts
- Read – Common Types of Investments
- Read – How to Buy and Sell Investments
- Read – How to Manage Your Investments
- Read – How to Keep Track of Your Investments
Stories From Women Inside the BC Securities Commission (BCSC)
Women at the BCSC include experts in securities law, corporate accounting, fraud investigation, information management, economics, geology, and communications. We believe in the power of diverse perspectives and the wealth of knowledge that women bring to the world of investing, so we’ve shared a few (anonymous) investing stories from women inside the BCSC.
The Gender Pay Gap in Canada and the Rest of the World
According to Statistics Canada, as of 2021, the gender pay gap for part-time employees is $0.89, which means women make 89 cents of every dollar men make. The gender pay gap for full-time employees is $0.90.
While the gender wage gap has been declining over time, a substantial gap still exists in many countries. Globally, women only make 77 cents for every dollar men earn. This is a major cause of lifetime income inequality. Among the reasons cited to explain this gap are gender differences in education, occupational segregation, and part-time work; fertility choices; and selection into family-friendly career paths. At current rates, it will take 70 years to close this gap.
When women are ready to retire, they often have saved only two-thirds of what men have saved. Yet, they have to plan for a longer retirement, as they tend to outlive men by an average of four years. Women are more likely to take maternity leave, which can make it challenging for them to focus on career growth and wealth-building opportunities.
Globally, nearly 65% of people above retirement age without any regular pension are women. (Data from United Nations)