India is the sixth-largest equity market in the world. However, when it comes to female participation in the stock markets it ranks among the bottom-placed countries.
Other emerging markets seem to be doing better. Female investor participation is 34% in China, 33% in South Africa and 29% in Malaysia. The Philippines has the highest percentage of female participation globally with 44 percent. Unfortunately, India’s gender gap is wider than others – with women making up for just 21 out of 100 investors
Despite being scrupulous savers, Indian women face social and economic barriers while participating in the equity markets. Although the number of female participants in the stock markets has increased over the years, there is still a long way to go.
Just like swimming, cooking, or driving, investing is an important life skill to possess. We have the top 8 reasons why women must invest in stocks today.
Helps bridge financial disparity due to gender
Women face issues such as gender pay gap, glass ceiling, top salary mismatches, low retirement ages etc. Several women have to let go of promotions or lucrative job opportunities due to family commitments. Women may also have to resign a few years into their careers to take charge of family responsibilities. Therefore, it becomes difficult for women to create substantial wealth. Investing in the stock market would enable them to create wealth and enjoy passive income in the form of dividends. Thus, over time, women may enjoy partial or complete financial independence.
Women live longer
According to WHO, women live an average of 5 years more than men. It means they may have to remain financially independent longer. Conversely, a longer life span would mean that women can make the most of compounding. So, the earlier women start investing, the higher are the chances of them enjoying a fulfilling lifestyle – especially during their retirement years.
Women-run Portfolios have delivered better returns than men
According to a Fidelity report published in 2017, women-run portfolios performed 40 basis points better than those run by men. Multiple studies propose that female investors generate better returns than their male counterparts – in some cases, the difference is up to 1%.
Women investors tend to be far more disciplined, meticulous, conservative, and patient than men. They are willing to admit they may not know a few things. Women investors ask for help, or read up to educate themselves rather than winging it based on their instincts.
Women approach risk differently, and they are willing to bet on the long-term game instead of feeling buoyed only by short-term gains. Such characteristics let women run profitable stock portfolios.
Accomplish financial goals
Investing is primarily done to achieve goals. Women may have multiple aspirations such as ensuring a comfortable retirement, arranging funds for higher education, buying a new SUV, well-being of parents, managing wedding expenses, international holidays, receiving passive income or enjoying a fulfilling lifestyle. Investing in share market will help them fulfill these goals comfortably.
Invest to beat inflation
According to a survey conducted in 2019 among female investors, 58% of respondents admitted that they park their money in fixed deposits, public provident funds, or savings accounts.
Due to inflation, the value of these savings depreciates over time as the average inflation rate is higher than the interest rates savings account or fixed deposits offer. Therefore, women investors may lose money despite saving regularly.
However, a fundamentally strong stock portfolio can offer inflation-beating returns and help women investors compound their wealth.
Augment household net worth
Household roles are blurring and the benefit of having more working members is being felt. More women have emerged as successful professionals or business owners. Women are keen to take an active role in making financial decisions. They can create wealth by investing in the equity market. Investing for the long-term will augment their household’s net worth and raise their standard of living.
Enjoy financial independence
Financial independence is an absolute must for every single individual. When you are financially independent – you can walk away from bad situations like a bad job or a relationship. Financial dependence could be the worst reason to stay in a hurtful situation. Investing right and early will give women investors the financial independence they seek. Such independence empowers women enough to decide on their well-being.
Becoming a role model
Every woman who invests becomes a role model for all the girls and women in her circle. They would influence other women across age groups to start investing and begin a virtuous cycle. Experienced women investors can even spread awareness among other women in their network.
As more women enter the stock markets and march forward towards financial independence, they must remember that approach to creating wealth in the stock market remains the same – buying fundamentally strong stocks and holding them for long.