Do men and women make different choices with their investments?

Financially literacy has a gender side to it too. Statistics point out how men exceed women in financial risk-taking.

Abeer Ray, MintGenie Team
Updated10 Feb 2022, 03:04 PM IST
Men and women invest differently
Men and women invest differently

Many say that feminism is a force to reckon with; that this collective voice of the women would one day bring them at par with the men of their society someday. The movement draws its inspiration from issues stemming from gender differentiation. But even if society puts both men and women on the same pedestal, would they view finances through the same lenses? As nicely encapsulated by John Grey in his classic book “Men are from Mars, Women are from Venus” how women differ from men in many ways, the gender differentiation is apparent in their outlook towards money too.   

More women in equities is a far call

Most studies have supported the notion of men being more risk-tolerant while investing in equities; more so as they display a higher level of confidence while allocating a part of their earnings to stocks. The propensity to acquire information about myriad investment approaches is more among male investors than their female counterparts.

Home loan rebates and deductions attract women

There is another twist to this recurring tale of men versus women while making financial decisions. Some financial plans include elements beyond just investments and retirement planning. An essential part of financial planning includes loans, which is why it is of utmost importance to check if the propensity to apply for loans has anything to do with traditional gender roles. Loans can be personal, for home, business or for education purposes. 

According to BankBazaar Moneymood 2022, the percentage of women borrowers was around 12 per cent and increasing before the pandemic hit the country. Post pandemic, this number has come down to 9-10 per cent. BankBazaar statistics revealed how women borrowers aged below 25 years taking personal loans are the biggest sub-group comprising 20.4 per cent of borrowers in that age cohort compared to the overall 9.4 percentage of women opting for personal loans. 

More women are likely to apply for home loans as they benefit as co-borrowers with their spouses. Lower stamp duty charges for women announced by many state governments coupled with lower interest rates by banks and financial institutions against home loans to women are possible reasons for women surpassing men in the loan category. 

Advantages and disadvantages of home equity loans

More women seek health cover now

Insurance is another sector that is essential to financial planning. While the idea of buying life insurance extends to all who are working and believe in securing their families’ future against unwanted financial dependence in the event of sudden death, buying health insurance is mostly limited to men who secure a family cover to pay for medical expenses when required. 

Statistics shared by PolicyX.com, an online insurance aggregator, reveal how more women had bought health insurance through this portal in December 2021 compared to the number of women seeking health insurance before. Roughly 25 per cent of the total customers, who had bought health insurance through PolicyX.com, were women in December 2021 compared to 15 per cent in December 2020. 

Gender difference in financial decisions

The proclivity to take financial risks depends a lot on financial information acquisition. While women like men love the idea of seeing their investments grow, the fear of negative returns when the market is down keeps many women at bay. This coupled with the fear of debts and liabilities in case investments go awry underscore how many women limit themselves to a comfort zone involving fixed return options. This explains why you will find more women preferring bank deposits and debt instruments over the ever-volatile nature of stocks and equities. 

An understanding of finance is essential to success today. Even if one may not be aware of how some financial instruments propel or impede our financial journeys, being able to take financial decisions independently is important. Of course, for the married, couples that earn and invest together also get to enjoy together. Most financial decisions depend on the aim and intent of investing money. While some may be yearning to earn high returns within a predetermined period, some are more inclined to raise a corpus that will see them through after they have retired. 

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First Published:10 Feb 2022, 03:04 PM IST
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