Women invest for the long-term in top companies they know and understand – The Globe and Mail

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As a new immigrant to Canada, Vrunda Bhatt feels a strong need to save and invest her money for her future – and to be in control of her finances.

Since arriving from India three years ago, Ms. Bhatt, 29, has invested about $6,000 with an online brokerage, which lets her invest in stocks she chooses – particularly technology stocks such as Microsoft Corp. MSFT-Q, India’s Infosys Ltd. INFY-N, Facebook known as Meta Platforms Inc. FB-Q and Tesla Inc. TSLA-Q

“I love that control,” says Ms. Bhatt, who works with an immigration settlement agency and is also a freelance journalist.

Her father-in-law is a financial advisor in India and advises her and her husband to invest in the stock market. Based on his advice, her minimum time horizon for any investment is five years, she says.

“I’m not greedy that way,” she explains. “I assume that this money doesn’t belong to me at this stage, even if I really want to buy a house and everything.”

She keeps in mind her father-in-law’s advice to only invest in blue-chip companies.

“I don’t do trading [or] investing randomly – but my husband does it. I don’t know why. I personally don’t prefer that.”

That divide between how women and men invest can result in a notable difference in performance, research shows.

A 2021 U.S. study by Fidelity Investments found that more than two-thirds (67 per cent) of women are investing outside of retirement and they’re doing it well – women outperformed men by 0.4 per cent.

The study also found that women are broadening the asset classes they’re investing in, including stocks, bonds, sustainable investments and cryptocurrencies.

More women are also taking steps to learn more about investing, particularly to reach specific goals, how to evaluate their current investments, and learn about cryptocurrencies.

“[Some] men are looking for the next bitcoin that’s going to make them taller, bigger, faster, richer very quickly,” says Elke Rubach, principal of Rubach Wealth Holistic Family Advisors in Toronto. “It doesn’t work like that.”

She says women can be shy about asking questions about investing but all clients should ask those questions.

“It’s not a dumb question. It’s dumb if you don’t ask it. At the end of the day, it’s going to affect you,” she says.

Ms. Rubach starts by talking with women about their goals and then “reverse engineers” their portfolios to meet those targets. “They’re willing to learn,” she adds. Many women are interested in equities in the real estate, retail and health care sectors, and focus on blue-chip stocks.

Women focus on goals, planning advice

Trixie Rowein, portfolio manager and vice president, private client group with the Pax Portfolio Advisory Team at Raymond James Ltd. in Edmonton, says many women she advises want to ensure their investments meet their goals – specifically taking care of themselves, their kids, and potentially their aging parents.

“They’re really looking for guidance on investment, retirement and estate planning,” she says, adding they want help setting up a solid investment plan that includes blue-chip stocks that will be resilient in the face of market volatility.

Others, such as her business news obsessed 96-year-old client, like to call and choose stocks – her latest pick was West Fraser Timber Co. Ltd. WFG-T. Some clients have also been asking about silver and gold investments as inflation and interest rates rise.

One reason women’s portfolios do better than some men’s is that they’re too busy to check their investments constantly. They rely on a trusted advisor and have the comfort and knowledge that the plan they’ve put in place is on track, Ms. Rowein says.

Although women are interested in environmental, social and governance (ESG) investing, “they’re more focused on the environmental footprint” of a company, she adds.

Women are also interested in the reopening trade – choosing stocks that may benefit as the economy reopens after the pandemic lockdowns such as airlines including Air Canada AC-T, restaurants, or cruise lines such as Carnival Cruise Line CCL-N.

Education is key to helping women invest

Women often prefer to invest in companies they know well and that make the products they use, Ms. Rowein says, adding it’s her role to educate female clients.

“We are going to live longer. A lot of us are going to be alone either by choice – we chose not to get married or got divorced – and some will become widows and responsible for their finances,” she says. “Of course, a time of grief is not the time to learn.”

Michelle Hung, author of The Sassy Investor and a financial planner, says many women know they need to invest, but they don’t know where to start.

“They just want security and some sort of nest egg, something to fall back on,” she says.

Her strategy to help educate women is starting with a basic portfolio of exchange-traded funds. Then she helps them invest in areas of interest like cryptocurrency or industries they know or want to support such as health or wellness, food, or environmental technology.

“When you learn and understand it, you become more interested in it,” she adds.

While Ms. Bhatt is fairly new to investing in the stock market, she finds it exciting to research stocks and invest based on her “gut” instincts. She used to check her portfolio daily but cut back as she found she was “addicted” to it.

She tries to keep her focus on the long term. Facebook has fallen since she bought the stock, but she expects the company will be able to turn its stock price around.

“Keeping your calm is very important, and that’s what I have learned,” Ms. Bhatt adds.

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