Why More Women Should Learn About the Stock Market

Are you a woman who is reluctant to invest in the stock market? Then you might want to think again.

According to a recent report by the Australian Shareholders Association, approximately 7.7 million Australians currently hold investments in the stock market, roughly 45% of whom are women.

Moreover, the report revealed that 1.33 million Aussies began investing in them in the last 12 months, at a fairly equal number between men and women.

So, as it is clear that many women are investing in the stock market, the question that should be asked is, why aren't you?

One possible answer is that women do not know as much about the stock exchange as they could.

Whether this is true or not is up for debate. However, in this post, we'll advocate why they should learn more about the stock market to benefit themselves (and potentially their family) both in the short term and in later years.

What is the stock market? 

Straight off the bat, it is a good idea to outline what exactly we mean by investing in the stock market.

In simple terms, many public companies, including the likes of Woolworths, BP and Commonwealth Bank in Australia, offer 'shares' of ownership on a platform called the stock exchange.

This allows people to become shareholders in these companies by purchasing units of their stocks. Each unit has a price associated with it, which can fluctuate depending on various factors, including how much of a profit the company is making.

The key to investing in the stock market, then, is to sell your shares for a much higher price than you initially bought them.

There is no rush to sell these units. Some people keep them for decades before selling, while others buy in bulk and then get rid of them as soon as their purchase price significantly increases.

Companies offer these shares as a way to introduce extra capital into their businesses in the hope of growing them and increasing profits"some of which will be given back to the investor in the form of dividends.

Of course, there is no guarantee a company's share price will increase over time, but many do. You only have to look at the CSL share price to see how well it has performed over the years.

Likewise, there is no guarantee you, as an investor, will make money, although this will depend on your investment strategy. However, many people have made a lot of money, while many others have lost plenty, too.

Why Should Women Invest in the Stock Market

For many people, investing in the stock market might feel like a risky move compared to keeping money in a savings account or superannuation. However, while these types of investments provide security, they rarely offer high returns. 

On the other hand, the stock market, can yield significant returns over the long term, which can help women to navigate some of the unique financial challenges they might face.

For instance, women live longer statistically than men. Moreover, the average life expectancy is increasing every year. For these reasons, women might find themselves in a situation where they outlive their partners for many years or live well into their 90s. As a result, they may need additional finances to support themselves in retirement, which their pensions might not fully cover.

Additionally, the gender pay gap disadvantages women in their ability to generate wealth. So, by investing in stocks and shares it gives them another income stream to potentially benefit from.

Perhaps one of the main reasons women invest is that it provides them with financial independence. Whether you are single, married, or divorced, having the ability to manage and grow your own personal finances can provide you with greater freedom and security overall. 

How More Women Can Invest in the Stock Market

If you want to invest in the stock market, here are some strategies you might want to adopt.

1. Educate Yourself

The first step you should take is to build up your knowledge about the stock market in Australia (or overseas).

There are plenty of accessible, free, and paid-for resources that you can draw upon to improve your understanding of these investment options, including the blog and podcast She's on the Money.

It is also worth attending seminars and following successful investors and investment companies on LinkedIn and other social media networks, who can provide you with valuable information.

2. Start Small

Rome wasn't built in a day, and neither will your wealth (unless you are very savvy/lucky!). So, it is a good idea to start slowly and gradually build yourself up as your confidence and knowledge grows.

Several apps, including Commsec, Nabtrade, and Sharesies, now make it easy to invest as little as $50 at a time in equities. They provide a way to minimise your risk as you start to learn the game.

3. Develop Your Strategy 

The key to successful investing is developing a strategy to grow your portfolio. To do this, you must be clear about what you want to invest in and what outcomes you want to achieve.

For instance, are you investing to be able to fund a dream holiday or wedding in five years' time, or do you want to build up a sizable nest egg for when you retire or inheritance for your kids?

Knowing what you want to achieve will help you develop a strategy for achieving it, which could include high-risk, day trading or a more cautious dollar cost averaging approach.