Where To Invest Settlement Money

Synopsis

With various studies indicating that a woman's portfolio earns better returns than a man's, it may be a good idea to let the wife invest.

Women have typically taken the backseat when it comes to participating in household finances, especially in investing. While the general perception, particularly among men, is that women do not know how to invest, women too are not confident about their own financial skills. While women are better at saving, they are not too enthusiastic about investing because they do not know where or how to do it. So, should the wives make the effort to learn about investing and take on this responsibility? Yes, they should, and here's why.

1. Women generate better returns than men
Various studies have shown that the portfolios of women investors deliver better returns than those of men. For instance, according to a survey by ET Money, whose findings were released in March this year, women investors have generated better returns than men every year from 2017 to 2020. In fact, during the pandemic in 2020, they recorded 14%returns while men generated only 11%. Not just in India, even in the US and UK, women have performed better than men. As per a 2021 Women and Investing Study by Fidelity between 2011 and 2020 in the US, women's returns were 40 basis points higher than men's. As per another study by Warwick Business School in 2018 among 2,800 investors, women not only outperformed the FTSE 100 over three years but also the men. While men's annual returns were 0.14% over the FTSE 100, those of women were 1.94% above it.

2 By nature, they are better investors
The reason women are able to give a better investing performance than their male counterparts could be due to their specific behavioural traits. Compared to men, women are more risk averse, trade less frequently, research more diligently, are more disciplined, and not over-confident. So they tread with caution, investing more in mutual funds rather than stocks; remain invested for the long term without frequent trades and switches; and are disciplined about their asset allocations without any knee-jerk reactions or impulsive redemptions. According to the University of California-Berkley analysis of common stock investments of men and women from over 35,000 households from 1991-1997 revealed that men traded 45% more frequently than women, but women outperformed men by 0.94% per year.

3 They are more likely to achieve goals
If the wife invests, the husband can remain assured that all their financial goals will be met beause women not only have an outcome-based approach to investing but also a longer term view. This means that since they are focused on the financial goal instead of relishing the thrill of investing, they invest in a manner that helps them achieve the goals in the given time frame.

4 Financial empowerment
One of the most important reasons women should start investing is that it will help them become more involved and aware about the fi nancial dealings of the household. In case of the death of husband or a debilitating illness, the wife would not feel lost due to her ignorance or be forced to depend on others for fi nancial guidance. She would not only be able to secure her own fi nancial future but also that of her children without being defrauded or indebted to others.

If you have a wealth whine, write to us...
All of us have been in a financial dilemma when it comes to relationships. How do you say no to a friend who wants you to invest in his new business venture? Should you take a loan from your married brother? Are you concerned about your wife's impulse buying? If you have any such concerns that are hard to resolve, write in to us at etwealth@timesgroup.com with 'Wealth Whines' as the subject.

(Disclaimer: The advice in this column is not from a licensed healthcare professional and should not be construed as psychological counselling, therapy or medical advice. ET Wealth and the writer will not be responsible for the outcome of the suggestions made in the column.)

Where To Invest Settlement Money

Source: https://economictimes.indiatimes.com/wealth/plan/money-relationships-why-a-wife-should-invest-instead-of-the-husband/articleshow/87391786.cms

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