When the Finance Minister announced in the Budget plans to start an all-woman bank, it drew some predictable jibes from the male Twitterati. “A new bank only for women in India? The moment Zara announces its sale, this bank will announce its bankruptcy,” said one.
These reactions underline the stereotyping of women and money. Women splurge on shopping. They don’t get finance because numbers make their pretty heads swim. They get easily conned by get-rich-quick schemes….
But we know that this is complete rubbish. (After all, more than half the team that writes Investment World is made up of women.)
So we cite various studies that prove with data, just how wrong these beliefs are.
“What! You spent Rs 1,000 on a pair of shoes??! Look how I got my cool new I-Phone 5 at 10 per cent off”.
We have all heard innumerable jokes about how women are addicted to shopping. Women may enjoy shopping, may talk about it, may spend more time in the shops or browsing online and may even make frequent shopping trips.
Men shop for luxury
However, data from UK’s 2012 Baines and Ernst survey on spending habits showed that men spend more than women on online purchases and on average spend 15 per cent more on credit card purchases. The higher online spending by men was observed in countries such as US and Australia as well.
The study also showed that online and offline, men tend to spend on luxury items rather than necessities.
The top spend of men is for liquor and big-ticket items such as cars and gadgets. Women shop more often and their purchases include essentials – kids’ and household items.
Women do ‘get’ finance
“Leave those complicated insurance brochures to me, sweetie. Let me do it for you.”
In most societies, men tend to take most of the financial decisions. But that doesn’t mean that women don’t understand finance.
In the Worldwide Index of Financial Literacy measured in 2012, both men and women in India received the same score of 60 points.
The scores were given by assessing three aspects of financial literacy - basic money management skills, investment knowledge and financial planning.
While Indian women have been closing the gender gap, data from other Asia/Pacific regions showed that in 10 out of 14 countries, women showed better financial literacy scores than men.
Also, the survey has seen an increase in women’s scores over the three-year period since it was started.
Across a wide spectrum of women, especially in rural and semi-rural areas, women’s self help groups and micro-credit programs have played an important role in increasing the level of financial literacy and in advancing women’s economic empowerment.
Women earn high returns
“Forget those dull FDs. Give me that Rs 20,000 and I’ll double it for you in a month”. Women save more and even without a direct source of income, 60 per cent of women in India who are housewives are able to save a minimum of 5 to 10 per cent of their household income.
It is widely believed that women’s higher risk aversion deters them from achieving high returns.
But a study by consulting firm Rothstein Kass found that female hedge fund managers handsomely beat the global hedge fund index return of 2.7 per cent, by earning a 9 per cent through the third quarter of 2012.
Over a five year period, women led funds outperformed both the HFRX Global Hedge Fund Index and the S&P 500.
A risk adverse attitude that potentially helps escape market volatility was cited as the reason for the out performance.
In the US, a study over a 6-year period found that men trade 45 percent more than women and earn 1.4 per cent less annual net returns (risk-adjusted) than women. The lower return was attributed to the frequent trading by men, driven by over confidence.
Need we say more? These statistics show that, yes, women don’t invest for an adrenaline rush. But they sure can make a return if they set their mind to it.
So, beginning this week, let’s demolish those stereotypes and work on making smarter investment decisions.