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“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition.” – Steve Jobs, Apple co-founder.
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THE LOW DOWN
Warren Buffett invests like a girl
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It’s time we have some real talk about overcoming performance anxiety. Ahem, no - not that kind - the professional kind. There’s been a long, persistent and, frankly, quite infuriating myth that females make bad leaders/managers/investors, and - you’ve guessed it - it’s all total nonsense. In fact, hedge funds run by women outperformed a broader benchmark of alternative investment managers in the past five years. “The HFRI Women index has returned 4.4 per cent over the past five years, compared with a 4.2 per cent return for the HFRI Fund Weighted Composite index, a broader gauge of hedge funds across all strategies and genders” (from the FT). The fact that women make better leaders is consistently backed by research - both in academic and auditing circles. We suggest you print out these articles, laminate them and keep it in your wallet for future mythbusting purposes.
But, seriously - if research continuously confirms that women are all-around pretty great at doing their job, why is the number of, say, female portfolio managers in hedge funds so low? Is it really all down to our lack of confidence, or is something more systemic at play? Although we can’t eradicate chauvinism (we wish!), we can gain more confidence and conquer performance anxiety. Case in point - women are actually far wiser at investing and retirement planning than they realise. Terrance Odean, a professor at Berkeley who has spent his career studying investor trends, found that men traded 45% more than women in the 1990s - he blames it on overconfidence. However, all that extra trading caused men to have average returns that were a full percentage point lower than women - we’d be lying if we said that doesn’t make us feel ever so slightly smug.
One way to boost confidence is to remember why women make better investors in the first place: we are less likely to engage in risky trading, are far more diligent with our research, make more diversified investments and are humble enough to admit mistakes, which leads to seeking professional advice. A calm, steady and longer term approach is key to successful investing, and women seem to be perfecting the art by the day.
How do you feel about women in leadership roles? Have you ever felt like you just weren’t good enough for a managerial position? Why, or why not? When it comes to investing - do you think you have the confidence to give it a go? We want to hear from you - please get in touch!
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OFF TO YOU
Picking the best Stocks and Shares ISA
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Speaking of myths (our theme du jour), you’ve probably heard this one, too: one needs to be rich to invest in a Stocks and Shares ISA. Nope, and nope. If you have your emergency fund set in place - we recommend 6 months’ worth of salary set aside in a cash ISA (for example) - you should consider investing your savings. Investing in Stocks and Shares isn’t exclusive to the uber wealthy - it’s merely the most tax-efficient and investor friendly way of saving money for the long term. Inflation and low interest rates mean that cash ISAs just don’t work as hard for your money.
We know the words ‘stocks and shares’ are enough to send some of you running to the hills, so we’ve put together a checklist to simplify the ordeal of choosing the best deal:
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Are you still overwhelmed by the idea of investing in a stocks and shares ISA’s? Do you have any burning questions relating to choosing an ISA account? Don’t be afraid to ask us what’s up - it’s what we’re here for!
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THE BIGGER PICTURE
Financial planning: a step-by-step guide
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If you had the chance to snoop around a financial planner’s office, what would you find? Rachel Copley, Financial Adviser at Amicus Wealth, breaks the enigma: she’s been kind enough to share her four-step financial planning process with us over at Vestpod. If you’re wondering what on Earth financial advisers actually do before they meet you, go check out the list. In essence, they provide a personalised service based on your investment profile and needs, and Rachel highlights four steps that help her understand the client (aka - you). If you’re not feeling entirely comfortable with the idea of seeking professional advice, Rachel suggests you prepare for your meeting beforehand, which helps take the edge off the intimidation. That, and a large glass of Chardonnay after you’re done!
Speaking of wealth management, we were fascinated with the graph below: it points to the fact that we turn to wealth management at various milestones in our life, but it most certainly isn’t a constant demand. Our aim? To keep our handle on financial planning - regardless of whether we’re twenty or eighty.
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It’s hard to get better without knowing where we need to improve. By answering our teeny-tiny weekly surveys, you help us understand your needs, wants and frustrations - which helps us make the newsletters more relevant. We promise it’ll be quick and painless - but it will make the world of difference to us.
Have you begun investing some of your money?
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*|SURVEY: No, and not planning to!|*
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As always, please don’t be shy and e-mail us with any questions, feedback, worries, confessions of love - anything goes!
See you next week.
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