Low mortgage rates, competitive markets and the desire to turn a quick profit — sounds like the perfect investment opportunity? If your investing instincts kick into high gear every time you drive past a 'for sale' sign, consider the following: a study by Barclays Wealth, in cooperation with Ledbury Research, found that women have an edge when it comes to managing finances.
The study, which looked at behavioural economics, provides empirical evidence that women are better investors than men. Whether it's monitoring the markets or flipping homes, women are naturally equipped to better manage stressful situations and difficult decisions.
A women's intuition
When it comes to the rigours of investing, be it in real estate or traditional stocks, women possess a number of innate characteristics that enable them to excel over their male counterparts.
1) Women are more cautious
Men love to take risks. With risk comes reward…sometimes. Knowing how to properly manage risk in an investment scenario is crucial. Sure, we all secretly yearn for the extreme highs and the one-in-a-million shot at success, but that's not a sound investment strategy. Since women are more risk adverse, they're less likely to act on impulse when it comes to investing in real estate or other investments. They take their time, work closely with qualified professionals, and analyze every aspect of the market before taking the leap.
2) Women have more self-control
Self-control is a double-edged sword in the investment world. While it pays to show restraint, strong willpower is often perceived as having a lack of financial confidence in the investment arena. For many women, self-control is inextricably linked to a fear of failure. As such, when it comes to financial management, a woman is more likely to be conservative with her investment purchases — though that often proves to be an advantage. What's more, women are less likely to panic and sell out of desperation. Indeed, when it comes to making a profit on a real estate purchase, women are more likely to beat the average and successfully ride the ups and downs of a volatile market.
3) Women are like a fine bottle of wine — better with age
Women naturally mellow as they age. Over time, women become calmer and more satisfied with their lot in life. They have a higher degree of acceptance and a better understanding of emotional reactions. This makes it easier to deal with stressful negotiations in order to see the bigger picture.
How to harness your investment girl power
Women across the country are harnessing their inner investment karma and throwing themselves into the real estate market. If you're thinking about trying your hand at real estate investment, here are some recommendations to help improve your chances of success:
1) Doubts are normal, but believe in your knowledge and abilities
Remember that fear of failure we talked about earlier? That nagging little voice in the back of your head can easily do you in if you're not careful. Whether you're dealing with mortgage interest rates or construction crews, know that the stress and anxiety you're feeling is completely normal. Don't let doubts get you down. Second-guessing your knowledge and understanding of the market will only lead you to make costly errors.
2) Don't go it alone
Home improvement shows make flipping real estate look like a walk in the park. It's not. It takes time, experience, and a sixth market sense. What's more, it takes teamwork. A good real estate investment requires an army of support — a knowledgeable mortgage broker, a talented realtor, a confident construction crew. So don't be afraid to seek out some help. Yes, in some cases it will cost you money up front, but in the end you will improve your odds of being successful.
3) You're going to make mistakes
Accept that mistakes are inevitable and you're going to very likely lose some money. If you go into your first deal thinking that you're going to turn a six-figure profit, you're in for a rude awakening. Practice makes perfect; the more times you invest and go through the process, the better you'll become at it. Once you have a little experience and confidence, you'll be amazed at what you can do.
4) Be yourself
When things get crazy and you feel like you're being pulled in a million directions, don't lose sight of your goals and your inner drive to succeed. Female characteristics suggest you have the natural ability to diffuse distressing situations and solve complex problems. So trust in your gut. And when you can't, ask a professional for help.
Having the edge
At the end of the day, we're all human. There's no guarantee that you will always make the right or most rational decision. Greg Davies, the head of Behavioural and Quantitative Finance at Barclays Wealth sums things up quite nicely, noting: "Classical finance does not take into account the emotions involved in decision making. It assumes we are all rational, but we aren't." Lucky for the female demographic, they may just have the investing and emotional edge.
GoldenGirlFinance.ca is a free personal finance and education site for women.
Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.