Young female investors on the rise

It took a global pandemic for Rachel Lamarche to try something she had wanted to do for years.

The 33-year-old PhD student had been intrigued but reluctant to start investing in stocks throughout her 20s, thinking it was beyond her reach and not knowing where to start.

Suddenly she found herself stuck in Melbourne, with more free time than she was used to.

Rachel Lamarche, 33, started investing during the pandemic after years of wanting to go public. Credit:Paul Jeffers

“I’ve always been a general information-heavy person and I thought I could really use all that knowledge I accumulate to potentially try to invest in the market,” she says. “I kind of saw an opportunity to educate myself a little bit more about the steps for me to do that.”

A few years later, Lamarche, originally from Montreal but now an Australian citizen, invested small sums in more than a dozen companies. All are companies that align with its values ​​by avoiding fossil fuels and, as a staunch vegan, animal agriculture.

She rarely trades, considers investing long-term, and never makes rash decisions — all of the investment strategies that research has shown are common among women.

“The saying goes don’t invest what you can’t afford to lose. I’m pretty careful. I don’t invest a lot in one company, I invest almost minimally or a bit more in a variety of companies,” she says. “I’m not here to make a quick buck.”

A study 2021 by the ASX found that the pandemic was a trigger for more women to start investing in stocks, with women accounting for 45% of new investors in the 12 months to March last year. Trading platforms and fund managers have seen this trend continue in 2022.

‘I’m very old school for younger people… I hate bitcoin. I hate NFTs. Some people make a lot of money, but I just know I want to stick with what I know.

Rachel Lamarche

And despite the wild swings in the market, experts say the strategies typically followed by female investors should stand them in good stead this year.

“We broke that stereotype”

Rachel White, head of financial advisory services at global asset manager Vanguard Australia, has seen a surge of women under 34 starting to invest.

Vanguard research has shown that women are more likely to hold diversified investments (managed or exchange-traded funds instead of individual stocks) and are more socially responsible, which means they are more likely to invest in ethical funds.

“I think the other factor is that a lot of female investors are actually investing for financial independence, to build wealth, to supplement that income, for a secure retirement versus a hobby or speculation “, she says.

“I think that’s why you see this difference in profiles – this more diversified investment strategy, the use of more managed funds and ETFs, versus trying to pick a winner on a stock market board. We have found that more male investors have this type of preference.

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Young women are also flocking to millennial-focused trading platforms such as Sharesies, which arrived in Australia in early 2021. Of its 600,000 investors in Australia and New Zealand, three-quarters are under 40. , and in Australia almost 60% identify as female.

The company’s Australian director, Brendan Doggett, says his female clients are focused on long-term investing – they hold an average of four ETFs and a handful of companies that are normally brands they know or have did extensive research.

“Traditionally, we think of stockbrokers as all men, wearing suits, trading on Wall Street. I think for a long time that kept women investors out of the market, they just thought, ‘I don’t identify with that culture or that behavior,” he says.

“I think over the past couple of years we’ve definitely broken that stereotype that you have to be a male stockbroker to trade in the market, or you need a lot of money to get started.”

This rings true for Lamarche. Although there are certain types of investments that she would never approach, she has been able to invest in a way that she feels comfortable with.

“I’m very old school for younger people,” she says. “I hate bitcoins. I hate NFTs. Some people make a lot of money, but I just know I want to stick with what I know, my core values, and listen to the experts trying to triangulate with my own understanding of the world. .

The female influencer

Along with the rise in female investors has come an explosion in the number of female “influencers” flooding the social media and podcast space.

Molly Benjamin runs the Ladies Finance Club, which has 32,400 followers on Instagram. Many women had more money and time to learn during the pandemic, she says, and with that came an appetite to get involved in stock investing.

An “investing for beginners” seminar she held during the pandemic drew more than 2,000 attendees.

Benjamin says that while women globally only make up about a fifth of total investors, that’s a statistic they’re trying to change.

“There’s a pay gap, a super gap and we’re more likely to take time out of the workforce to care for children or elderly parents, so we can’t ignore the investment and see it as a n “Being out of place, too hard, or too boring. It just needs to be considered a normal part of growing up.”

Senior women working in stock markets and finance say this social media trend is changing the conversation to make the space more accessible to women.

Gemma Dale of nabtrade says there are clear signs that the number of women investing is increasing.

Gemma Dale of nabtrade says there are clear signs that the number of women investing is increasing.

Director of SMSF and Investor Behavior at Nabtrade, Gemma Dale, said that while the overall proportion of women investing is still low, there are clear signs that the number is increasing and the trend is being driven by younger women. .

“I think it’s wonderful that young women have role models and people they can relate to when talking about money and especially investing,” says Dale.

“There’s been a lot of ‘here’s how to budget’ with women for a long time. But not much about financial and stock markets and valuations and wealth creation in that sense. I think the fact that it’s starting to become popular is an incredibly positive outcome.

While accounts aimed at women are welcome, the Australian Securities and Investments Commission (ASIC) has also reminded consumers to be careful when seeking financial advice on social media. He published tips in march who warned influencers who discuss financial products and services online to comply with financial services laws.

Dale advises: “You want to make sure that [advice] comes from people who have expertise in the field.

“Women stick to their guns”

This year is a bumpy road for investors. Australian markets have seen wild swings, associated with supply chain issues, high inflation, rising interest rates and an ongoing energy crisis.

The conditions rattled investors, bringing a sea of ​​red to global equity markets. Earlier this month, the ASX 200 suffered its worst daily fall since the start of the pandemic and entered a “correction”, while Wall Street entered a “bear market” with a fall of more than 20% from a recent high.

“I absolutely think women will be careful and make pretty good decisions in this environment because it’s a complicated environment.”

Gemma Dale, nabtrade

Despite the volatility, experts say typical women’s investment behaviors will see them on average fare better than men.

Dale says being careful with money will be the best strategy over the next six months, with the risk of a recession, rising unemployment and inflation. “It’s probably more a time to pay down debt and be pretty careful, and honestly, that’s what women are doing a lot more carefully than our male investors,” she says.

“We don’t see them panicking selling in dips or anything like that. So I absolutely think women will be careful and make pretty good decisions in that environment because it’s a complicated environment.

Although the market volatility has been stressful for Lamarche, she is still happy to have taken the plunge.

“Before, you had to go to Morgan Stanley or Goldman Sachs – that’s what you think of when you think about investing. I think we are finally beginning to understand that we can invest on our own and according to our values.

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