Women’s Day 2019 #GirlPower
In an historically male-dominated profession like investing and finance, women have always had to fight harder to gain the recognition they deserve. But now the glass ceiling has been smashed and we have growing numbers of female leaders, entrepreneurs, investors and a stronger movement towards equal pay the world over. Well, it’s about time!
In the world of global politics and economics we are seeing more female leaders than ever before, with the likes of German Chancellor, Angela Merkel, World Bank President, Kristalina Gorgieva, and IMF President Christine Lagarde leading the way with some impressive titles and global clout.
There have been approximately 136 female heads of state (Prime Ministers or Presidents) to date, with that number accelerating markedly over the last decade. The consensus of a recent study undertaken by McKinsey was that female leaders presided better over more diverse populations, bringing out higher growth rates on average than their male counterparts.
With the world becoming increasingly multicultural and diverse we will undoubtedly see this number increase over time, and it’s wonderful to see. That’s the kind of girl power we need!
When it comes to entrepreneurship, women are making serious strides to restore the balance between the genders, and venture capital investors are starting to take notice. Historically, female-led startups have raised 36 times less money to support their ventures than was given to male companies. Shocking, we know.
However, recent data has shown a reversal in this trend as female-led companies have proven to be more capital-efficient, raking in an impressive 35% higher return on investment (ROI) and, when venture-backed, 12% higher revenue. From 2007 – 2018 female-owned businesses grew by 58% in numbers and 46% in revenue, indicating a real surge in momentum for female-led startups.
Top female entrepreneurs, such as Cher Wang, Denise Coates and Kiran Mazumdar-Shaw are all changing the narrative on what it means to be a successful business owner. This positive trend is encouraging for the growth of promising small and medium size enterprises and closing the funding gap that still exists between male and female-led companies. There’s still room for improvement, but it’s a great start.
We all know that there has been a significant wage gap between the genders for some time now with women earning 0.81 cents for every Dollar earned by their male counterparts. What you may not have known, however, is that this directly impacts the amount of money women have to invest, hurting their ability to achieve their long term financial goals.
While women have been shown to be far more financially responsible in terms of budgeting than men, they fall behind in their willingness to invest and take risks. The SoFi (Social Finance) research and analytics team found that on average women invest 5.4% of their income while men invest 6.6% leading to a deficit in longer term earnings for women.
This trend, however, is also turning around thanks to the advent of fractional trading for retail investors and more comprehensive research on the performance of female fund managers. Fractional investing has removed the risk component of needing such a sizable capital base to get started investing. More young females are moving into the financial space and putting their excess savings to work than in times gone by. An extremely promising trend!
On the professional side, a growing amount of research is beginning to support better performance from female managers over time, thanks to their more level-headed approach to manageable returns. Male managers were shown to be far more likely to pursue highly volatile instruments that would erode gains over the long term, while female managers’ more conservative approach would outperform their counterparts and the benchmark every year. How’s that for a turnaround?
Legendary managers, such as Nicola Horlick, Sarah Whitley and Louise Lo are just a few of the many female managers leading by example and making a name for themselves in the finance world.
Where to from here?
The key takeaway from this is a shift away from the unbalanced times of old towards a more equal grounding in the world of international politics, entrepreneurship and professional and retail investing. These trends are extremely encouraging to see, and will no doubt accelerate as the movement gains more traction.
So, if you’re standing on the edge and unsure about your investing of financial future, all you have to do is take the plunge. Women in the finance world are becoming a force to be reckoned with, and more and more women are taking control of their financial future…If you haven’t already, then you should you.