We’ve all heard the words “diamonds are a girl’s best friend.” In today’s world, where a diamond loses 25-50% of its value the moment you purchase it, girls need to look for a new best friend. We thought that maybe investing in the stock market could be the new best friend a girl could rely on.
After all, studies show that investing in companies is one of the best ways to generate wealth. So we decided to look at the current landscape to see if women and the stock market were getting along.
What we found
The first thing we looked at was Thndr’s investors. We found that female investors make up a small portion of the total investors, leaving the playing field relatively empty of women.
Wait a minute…
Is the stock market biased?
“The stock market has no bias” is a seemingly blunt statement that could hold an important truth.
The stock market operates on a level playing field, where men and women are treated equally. It stands out as a purely transactional space, which means that the market doesn’t differentiate between investors based on gender. It simply executes orders.
International research also indicates that women investors outperform their male counterparts by an average of 0.4%.
Now if the stock market doesn’t play favorites and research shows that women invest better then why is this significant gender gap still there?
Are women not interested in the business world?
Our heads then took a turn to explore whether women were interested in the business world in the first place. How? By examining whether they were being represented on boards and taking leadership positions. Frankly, the numbers painted a positive image.
According to a 2021 report issued by the Egypt Women on Board Observatory (WoB), the percentage of women on boards of EGX-listed companies increased by 31% compared to 2020.
And in general, the percentage of women on boards of companies and banks rose by an average of 30% in 2021 compared to the previous year.
It’s worth noting that the country’s ecosystem not only had a decent female representation on boards of companies, but also its stock market boasts a female vice chairperson and 40% female representation on its own board.
We spoke to Neveen El Tahri, the first elected woman on the EGX board and the chairperson of Delta Shield for Investment, a private investment firm, to get her take on the golden question.
“Women on boards is not just a thing for diversity, but because we (women) think differently,” El Tahri said. “Having women on boards has made a difference in the performance of the companies they sit on.”
As Tahri said, women on boards and leadership positions bring something special to the table. According to a Harvard study, when companies went from having no women in top positions to having 30% of the latter held by women, their profits increased by 15%.
If there’s one thing we can learn from the stats is that women are not shying away from leadership positions. Yet, are they shying away from the stock market in specific?
This disconnect prompted us to look a little further. What could be the reasons behind this gender investment gap?
What could be causing this?
The big screen
The first thing we considered is the big screen and how pop culture portrays the stock market, ’Cause after all who isn’t influenced by the world around them and what they see on TV?
Now, quite frankly things here didn’t look too good. Movies like “The Big Short” and “The Wolf of Wall Street” make it seem like only wealthy guys with slick haircuts can invest in the stock market. A playground for rich, male traders who take big risks with big money.
Playing it safe
Now, if the stock market is a risky club, and research shows that women are more risk averse, it makes sense that fewer women would approach it.
“Women by nature are much more conservative,” El Tahri had also stated.
Wells Fargo, one of America’s biggest banks, found that women in the U.S. took approximately 82% of the risk that men took when investing. In the bank’s study, they found that women were able to achieve higher returns compared to men while generally taking fewer risks.
Since women tend to be more risk-averse, does that mean they opt for less risky investment options? The short answer is maybe. According to Dahab Masr, over the past two years, a whopping 44% of their clientele were women who invest in gold. According to their data, older female age groups are more likely to invest in gold.
The latter is usually considered a safe investment because it’s something you can hold, and its value stays more stable, especially during economic turmoil.
The way forward
The first step to bridging the gender investment gap is by changing the narrative around investing in stocks. Although many people perceive the stock market as risky, it’s proven to be one of the best ways to generate wealth in the long term. When you invest in the long term, you reduce the overall risk by allowing time to even out the market fluctuations.
To truly create lasting change, we need to start early by raising our girls on the importance of investing and helping them develop the skills needed to succeed in the financial world.
The wrap-up
Regardless of biases and whatever is in the media—the good news is more and more women are investing in the stock market than ever before!
As of 2021, 67% of women in the U.S. are investing outside of their retirement plans, according to Motley Fool. Additionally, Thndr’s data suggests that women have a larger appetite for learning about money and investing.
Women are twice as likely to attend sessions and consume educational content.
The data also shows that the number of female investors on the Thndr app grew sixfold in 2023 compared to 2022.
Ultimately, it comes down to learning and understanding how investing works. Education should be a priority on everyone’s to-do list. As Neveen said, “Understanding finance should be something on everybody’s plate.”
With the right support, resources, and the right mindset, women can not only take advantage of this wealth-generating opportunity but also pave the way for a more inclusive investing landscape for generations to come.
Now that you’re already here, you can check out our upcoming webinar on budgeting and investing basics. Invest in your future, and lead by example—paving the way for more women to come (Bonus: making a new best friend).
