It took a global pandemic for Rachel Lamarche to try something she’d wanted to do for years.
The 33-year-old PhD student was intrigued but reluctant to start investing in stocks in her 20s, thinking it was out of her reach and unsure where to start.
Suddenly she was trapped in closed-off Melbourne, with more time to spare than she was used to.
“I’ve always been someone who consumes a lot of news in general and I thought I could really use all this knowledge I was building to try and potentially invest in the market,” she says. “I saw an opportunity to educate myself a little bit more about what the steps would be for me to do this.”
A few years later, Lamarche, originally from Montreal but now an Australian citizen, invested small amounts in more than a dozen companies. They are all businesses that align with its values by avoiding fossil fuels and, as an avid vegan, animal husbandry.
She rarely trades, sees investing as long-term, and never makes hasty decisions — all investment strategies researched have shown are common among women.
“The saying goes, don’t invest what you can’t afford to lose. I’m pretty careful. I don’t invest much in one company, I invest almost minimally or a little more in different companies,” she says. “I’m not into making a quick buck.”
A study 2021 The ASX found that the pandemic was a trigger for more women to start investing in stocks, with women making up 45 percent of new investors in the 12 months to March last year. Trading platforms and fund managers have seen this trend continue into 2022.
‘I’m very old-fashioned for younger people…I hate bitcoin. I hate NFTs. Some people make a lot of money, but I just know I want to stick with what I know.’
And despite wild swings in the market, experts say the strategies typically followed by female investors will serve them well this year.
‘We have broken that stereotype’
Rachel White, chief financial advisor at global asset manager Vanguard Australia, has seen a wave of women under 34 start investing.
Vanguard’s research has found that women are more likely to hold diversified investments (managed or exchange-traded funds rather than individual stocks), and are more socially conscious, meaning they are more likely to invest in ethical funds .
“I think the other factor is that a lot of female investors are actually investing for financial independence, to create wealth, to supplement that income, for a secure retirement rather than as a hobby or speculation,” she says.
“I think that’s why you see that difference in profiles – that more diversified investment strategy, using more managed funds and ETFs, versus trying to pick a winner based on a stock tip. We found that more male investors have that kind of preference.”
Younger women are also flocking to millennial-focused trading platforms like Sharesies, which came to Australia in early 2021. Of the 600,000 investors in Australia and New Zealand, three quarters are under the age of 40, and in Australia nearly 60 percent identify as female.
The company’s Australian manager, Brendan Doggett, says its female clients are focused on long-term investments — on average, they have four ETFs and a handful of companies that are typically brands they know, or have researched extensively.
“Traditionally, we think stockbrokers are all men, dressed in suits, trading on Wall Street. I think female investors were kept out of the market for a long time, they just thought, ‘I don’t identify with that culture or that behavior,’ he says.
“I definitely think in the last two years we’ve broken that stereotype that you have to be a male stockbroker to invest in the market, or you need a lot of money to get started.”
This is true for Lamarche. While there are some types of investments that she would never come close to, she has been able to invest in a way that she is comfortable with.
“I’m very old-fashioned for younger people,” she says. “I hate bitcoin. I hate NFTs. Some people make a lot of money, but I just know I want to stick with what I know, my core values and listen to the experts who try to triangulate whatever my own understanding of the world is.”
The female influencer
With a rise in the number of female investors, there has been an explosion in the number of female influencers flooding social media and the podcast space.
Molly Benjamin runs Ladies Finance Club, which has 32,400 followers on Instagram. Many women had more money and time to learn during the pandemic, she says, and with that arose the need to get involved in stock investing.
An “investing for beginners” seminar she held during the pandemic had more than 2,000 participants.
Benjamin says that while women generally still only make up about one-fifth of total investors, this is a statistic they’re trying to change.
“There is a pay gap, a super gap and we are more likely to make time out of the workforce to look after children or elderly parents, therefore we cannot ignore investing and see it is not our place, too difficult or too difficult boring. This must just being considered a normal part of growing up.”
Senior women who work in stock markets and finance say this trend on social media is changing the conversation to make the space more accessible to women.
Nabtrade’s director of SMSF and investor behavior, Gemma Dale, says that while the overall proportion of women investing is still low, there are clear signs that the number is increasing and the trend is being driven by younger women.
“I think it’s great that young women have role models and people to talk to about money and especially investing,” Dale says.
“There’s been a lot of ‘here’s how to manage your budget’ with women for a long time. But not much about finance and stock markets and valuations and wealth creation in that sense. I think it’s an incredibly positive result that it’s starting to get popular.”
While women-oriented accounts are welcomed, the Australian Securities and Investments Commission (ASIC) has also reminded consumers to exercise caution when seeking financial advice on social media. It released guidance in March warned that influencers who discuss financial products and services online are adhering to financial services laws.
Dale advises, “You want to make sure [advice] comes from people with expertise in the field.”
‘Women really stick to their guns’
This year has been a bumpy road for investors. Australian markets have experienced savage swings, coupled with supply chain problems, high inflation, rising interest rates and an ongoing energy crisis.
Circumstances have confused investors, leading to a sea of red in global stock markets† Earlier this month, the ASX 200 suffered its worst daily fall since the start of the pandemic and entered a “correction”while Wall Street entered a “beer market” down more than 20 percent from a recent high.
“I definitely think women in this environment are going to be careful and make some pretty sensible decisions because it’s a complicated environment.”
Gemma Dale, nabtrade
Despite the volatility, experts say women’s typical investing behavior will do them better than men, on average.
Dale says being careful with money is the best strategy for the next six months, with the risk of a recession, rising unemployment and inflation. “It’s probably more of a time to pay off debt and be very careful, and frankly that’s what we see women doing much more cautiously than our male investors,” she says.
“We don’t see them panic selling in dips or anything like that. So I definitely think women will be careful and make some pretty sensible decisions in this environment because it’s a complicated environment.”
While the market volatility is stressful for Lamarche, she is still glad she took the step.
“You used to have to go to Morgan Stanley or Goldman Sachs – that’s what you think of when you think about investing. I think it’s finally starting to understand that you can invest alone and according to your values.”
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