According to Terrance Odean, who has spent his entire career studying investor trends and is a professor at Berkeley’s Haas School of Business, women are far better at investing than men. In fact, female traders have average returns that are a full point higher than men. They’re also less likely to engage in dicey day trading, and they’re better at diversifying their retirement portfolios.
Although the average returns for men and women have been comparable in the last decade, women have lower risk portfolios. In an effort to keep this trend growing, here’s some solid advice for women considering a foreign investment. Don’t shy from international investing because it’s actually a great way to diversify and grow your portfolio.
Diversification is Key
In a piece called “Best Tactics for Retiring Early,” Kirk Chewning Cane Bay (a leading management consulting service for clients in the financial services industry) reminds savers that diversification is essential to success. “Avoid having an aggressive approach with your investment,” he warns. He advises that investors take advantage of diverse structure, such as “stocks, bonds, short-term investments, and international investments.”
Overcoming Common Challenges
The main challenges are liquidity risk and currency risk. To overcome these challenges you’ll need to be very calculating. Ignore the idea that “great risk = greater reward,” and play the long game. Place safe investments.
Women seem to excel at this because they are angel investors. Although women seem to avoid risk more often than men, risk is forever presence and therefore will require analyses before money is spent. It’s a common misconception that all women are adverse to risk, and some risks actually should be taken because each and every investment has risk associated with it.
Alongside the main challenges are other challenges, such as international law, tax procedure, and knowing the country’s culture. To avoid mistakes and misconceptions, you should work with a financial advisor or consulting agency to ensure all risks have been calculated. They will analyze political risk, cultural impact, legal protections, governance, and transparency and market-capacity constraints.
When choosing a financial advisor or consulting firm, be wary of any that don’t have good hiring practices. Cane Bay Partners is a great example of a consulting firm that does hiring the right way. They personally cultivate a number of students to ensure their education covers the fundamentals of their business, including a curriculum that covers decision sciences, predictive analytics, and econometrics.
How to International Investments Increase Wealth
Foreign investments have many advantages, including a high potential for growth. Undeveloped markets that are experience a surge in growth are untapped resources for incredible wealth. If you can be successful in their identification, your will see significant returns.
Be wary of your spending to help ensure your returns are greater. International investing doesn’t always require worldwide travel, but in some cases it may. Do your best to keep travel costs low, and do your best to act as a saver.
Why not join in on the social side of international investing? Female participation in investment clubs has grown in recent years. In fact, about half of the members of investment clubs are women; although, the numbers from females in financial positions are still relatively low (5 percent are venture capitalists, 12 percent are angel investors, and less than 3 percent are hedge fund managers).
Ladies, keep those numbers growing. Women are encouraged to flex their finance muscles at home and abroad. Your aversion to risk, but also willingness to diversify into guaranteed income streams is an asset to the economy, so make those moves.