Commercial investing products aimed exclusively at women irritate me. Their very existence implies that there is something special, and not quite competent, about women who invest. But I can't argue with something that seems to be helpful for a number of women, especially those who are just getting started.
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OK, so I'm not thrilled. The whole subject has an air of dancing bear about it. (As author John Irving pointed out, the wonder of a dancing bear is not that the bear dances well, but that it dances at all.)
Ironically, as a group, women seem to be better at investing than men, as a group. Several studies have found that women investors outperform men by one to two percentage points. (Lest you think that isn't very much, may I remind you that increasing your average return by just one percentage point each year would increase your final portfolio value by 20% after 25 years.)
I suspect that most of that difference is due to one factor: Fewer women day trade. Take out testosterone-fueled trading (practiced by a small number of men and a much smaller number of women) and I would bet that there would be little difference in overall returns or trading behavior.
So why are brokers offering seminars for women investors, women writing books for women investors, and even The Motley Fool setting up a discussion board called Women & Investing and offering a (free) e-mail highlighting women's issues?
Obviously there are multiple reasons. I suspect that the overriding reason behind the first two is cash. Naturally, The Motley Fool is above such base motivations. Our pure and unsullied reason is that a number of women asked for the board and the newsletter -- and read them and view our ads and hopefully some of them shop at FoolMart. (Uh, oh! Women and shopping! I forgot. We obviously DO have a cash motive!)
There are a number of personal finance issues that affect the sexes differently. No question about that. I have no problem with personal finance information targeted to women addressing the reasons why one needs to invest. But when it comes to actual investing, the selection, buying and selling of stocks or mutual funds, where is the women's angle? Aren't we all looking for the best returns we can get that are in keeping with our personal risk profile and conscience?
Motives aside, is gender-segregated investing information a good idea? I have no objection to a discussion board where women can discuss personal finance issues or anything else. Shoot, we also have boards for teens, teachers, couples, and Left-Handed Fools in Akron (no kidding). The right of free association is about as basic as you can get. But what about the books, seminars, and general commercial effort to extract cash from women for investing advice aimed specifically at them?
I admit it bugs me, but that's beside the point. Do such products help? I come down firmly astride the fence on this one (I can do that painlessly because I'm a woman). From an information transfer point of view, I think that products specialized to that extent almost have to be inefficient. There are few things about financial planning or investing that are gender-specific.
Women as a group outlive men and may need to plan for a longer retirement, but you know what I think about retirement planning by statistics. That kind of difference is certainly worth a paragraph (and to the extent that such paragraphs are lacking in older financial planning books, perhaps books focusing on women are justified). And certainly divorced women have a host of financial questions that do not commonly apply to divorced men.
But I just hate to see more fragmentation. As the Left-handed Fools in Akron surely know, we are encouraged to identify with a group and define ourselves by that group. Our melting pot society has frozen over and cracked and we are all left stranded on little ice floes with people just like us. When it comes to investing our money, though, we have so much in common yet so many different attitudes that I don't see how adding gender to the mix can be terribly useful. More useful would be an examination of people that aren't like us and of attitudes that we disagree with. You can learn a lot from that.
F. Scott Fitzgerald said, "The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function." I'm not too sure about the first-rate intelligence part. Come to think about it, I'm not too sure about the ability to function part, either (which just shows how true the statement is), but every time I make the case for less fragmentation, the other side of my brain starts an argument. It says that when you live in a highly complex society, you just can't relate to everyone. Men and women think differently about many things. (Whether that is innate or learned I will leave to the academics.) If women were not putting out cash for those books and seminars, they wouldn't still be popping up everywhere, so who am I to complain about something many women apparently find useful?
I have asked several women who favored some kind of gender-based approach to investing why they thought it was important to have all-women groups. In each conversation one word invariably cropped up: intimidation. Note that not all of these women felt personally intimidated when discussing investing with men, but they all mentioned that feeling intimidated when discussing money around men was a problem for some women.
In an ideal world this wouldn't be the case, of course, but from a purely practical point of view, I guess I have to support a technique that seems to be helpful, especially to those who may be new to matters financial, whether I love the idea or not. If the idea of learning about investing seems less overwhelming when couched in terms of women-only advice, well, that's probably no more harmful than all those sports metaphors that pepper so many investing books.
A comment by a friend in an all-woman investing club was illuminating. I asked her if she would consider going to an investing seminar pitched exclusively to women. "No," she said. "I would be afraid that they would talk down to me -- I wouldn't want the watered-down version." Who does? Are you listening, Merrill Lynch? We all want information tailored to our financial situation and our level of expertise. Mostly, those things transcend gender.
Come to think of it, though, I'd buy an investing book aimed strictly at women -- if I could be sure it wouldn't have any sports metaphors in it.
Fool on and prosper!
Related Links:
Women and Retirement Wake Up Call, Motley Fool Retiree Column, 6/12/00
Women & Investing: Taking Stock, The Washington Post, 9/10/00