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VALUE INVESTING
By
The Motley Fool is running a 3rd Financial Workshop For Women. The first two were sold out in a matter of days, so we're running an unprecedented third workshop. Places are running out fast. Click here to learn more and to book your place at our next event. -------------------------------------------------------------------------- "Women face hardship in old age" was the title of a recent article we ran, drawing attention to the frequently inferior pension situation of women compared with men. I agree and would go further by saying women face hardship at any age compared with men. I say this because I have long considered that women's lives are far tougher than men's for a variety of reasons, financial and otherwise.
One of the general aims of the investment styles of value and high yield portfolios is to encourage investors to try and create capital long term by their own efforts, eschewing institutional schemes and particularly anything from an insurance company. For women, particularly for those with minimal pension entitlements, it can be argued that this aim is especially important. Since we are told that many women have only a fraction of the pension income of men, it follows that long-term investing should attract more women than men. I'm not sure it does, not into individual shares anyway. Perhaps women are more attracted to insurance company schemes, in my view amongst the worst ways to invest long term, because they see these as less risky. Women are supposedly more risk averse than men. So I suspect that the insurance companies, by their marketing, are grabbing a huge share of the market for women's long-term savings with the phoney premise that their products are somehow both low risk and high reward, when the opposite is more likely to be the case. For those able to save regular sums of a few thousand a year and seeking a long-term capital building approach which requires little maintenance, I think it is hard to beat the High Yield Portfolio (HYP) idea with dividends reinvested. I am convinced it will beat tracker funds while also exhibiting lower volatility, i.e. less risk. It will also very likely leave behind any scheme marketed by an insurance company. That applies to anyone of course, but I am saying that women in particular should give this consideration, especially those with less certain financial futures who until now had not considered going into individual shares. It sounds patronising I know, but a woman may well make a much better HYP investor than a man because she is more likely to hang on to the shares over the long term. This is a critically important personality requirement for the strategy. A man is more likely to trade the shares, over rating his skills at doing so in a typical male fashion and probably ending up worse off in the long run. Or they will be panicked out due to short-term scares which should mean nothing to the eternity holder. Doing precisely nothing is the most active thing you can do as an HYP player and women handle this better than men. I've never really approved of the idea that there is such a thing as "Women's Investing". A share is a share whoever owns it. This is in contrast to personal pensions where the female version is seriously inferior to the male because of lower annuity rates. I know it is because of increased longevity. My point though is that their living expenses are the same on a lower income. Therefore they are worse off when it really matters. But, to the extent that men and women may have somewhat different investment personalities, the HYP idea seems slightly more of a female scheme than a male one. Combined with my belief that it is likely to beat nearly every other kind of equity investor's approach over the long term, this suggests that this really is the ideal approach for women willing to go with the stock market for long-term capital building.