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  • What stops women from investing?

    Article by Jayant Pai in The Ecomonic Times, May 9, 2016

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    Societal mores play a big role in women’s passivity when it comes to investing. Here are some ways in which they can become more active participants.

    What stops women from investing?

    Today, women are outpacing men in several areas. Surprisingly, investing is one area which still provides fertile ground for studying gender differences. On the face of it, this field should be gender agnostic as it does not involve physical exertion or spending long hours in office, both considered limitations for women. However, there are some differences in the manner in which the two genders approach investment.

    So, why don't women take an active interest in investing? There is no evidence that one gender is more rational than the other since both are prone to greed and fear. Both genders also have the same opportunity to learn about investing and there is no difference in the degree of Internet adoption. Women are as conversant with consumer technology as men.

    The apparent lack of interest in India is rooted in societal mores. The division of labour, wherein man provides and woman nurtures, is evident even in the most progressive urban households. Investing is seen as a male domain. Even when the woman earns a sizeable income, it is often agreed that her income will be used for household expenses and man's for investments.

    Besides, men are often not very forthcoming about investments. Any question posed by the spouse is viewed as an irritant and most women give up after some time. Even if a woman acquires knowledge, she does not take the next step of investing. This may be the reason some investment options are overwhelmingly dominated by men.

    How to encourage women

    Raise awareness: First, we should make women aware that they possess certain traits which are naturally suited to investing. They are less impulsive and more inclined to step back and reflect. This makes them better investors compared with men. Women are also more open to admitting their mistakes and willing to learn from them.

    Start young: Exams such as the National Financial Literacy Assessment test (N-FLAT) should be made mandatory for all students between the ages of 13 and 16. This will introduce the concepts of finance and investing. The exam results are unimportant. What matters is jettisoning the fear of 'investing'. The Financial Planning Standards Board of India could devise programmes for them.

    Exploit 'nurture' factor: The content can be created in such a way that it demonstrates how investing is good for their family members, not just themselves. This could at least make them ask their spouses more probing questions about financial goals and the means to achieve them. If they don't get convincing answers, they could take the reins in their own hands.

    Difference between speculating and investing: This is more pertinent when it comes to stock markets and equity mutual funds, which are often perceived as dens of speculation. This should help women understand the perils of inflation and effects of taxation, how safe investments are not as safe simply because they may not help you attain financial goals.

    Create self-help groups: There are several role models in the banking and investment-oriented sectors that women can look up to. It would be good if they could take the lead in organising self-help groups for women, helping them take the first steps towards investing.

    Educate men: Men should be educated about a higher degree of inclusion before taking investment decisions. They should be taught why they need to explain the rationale behind decisions they have taken.

    The original article could be seen here.

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