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Investing Confidence for Women

How a lack of confidence can impede your need to make necessary investment decisions and the steps you can take now to overcome investment hesitancy.

I just finished reading The Confidence Code by Katty Kay and Claire Shipman which further opened my eyes to one of the most persistent behaviors I have observed over the decades in helping others manage their financial lives. Women often lack confidence in making crucial investment decisions.

In numerous meetings, women listen intently to the advice on wealth, retirement, and investing. They appear to understand it cognitively only to then reveal they are not ready to make a decision about their financial future.

Most eventually make the decision to invest but it has been the hesitancy, the delay in making a commitment, that has concerned me over the years.

Why Women Need More Help

A widow, I’ll call Evelyn, was referred to me by her accountant. The insurance money had been sitting in a bank account for months and her accountant suggested she speak to me about getting the money invested. We discussed the need for financial planning and getting the money working for her and her family’s future.

Since I had not heard back from her, I asked the accountant to reach out to Evelyn and see if there was something more I could do to help. She responded by telling him she had not been able to reach a decision about what to do. Evelyn is not alone.

There is a line in the Confidence Code that really jumped off the page. “Confidence is the stuff that turns thoughts into action” (p.50). This encapsulates the essence of the decision making issue Evelyn is experiencing: her inability to take the action needed to improve the likelihood of a successful financial outcome.

It was then that I realized I needed to do more to help women overcome their investing hesitancy and to gain confidence in making sound financial choices.

Five Steps Women Can Take To Gain Investing Confidence

 

Step 1: Acknowledge The Lack Of Confidence

It’s been said repeatedly that you can’t fix what you don’t acknowledge. The reasons we tell ourselves for not taking action stem primarily from the lack of confidence most women feel about money and perhaps even life in general. Although recent research has indicated that there is a genetic component to broader personality traits such as confidence, nurture plays a larger role.

Girls are raised and praised for conforming, for being good, and for following the rules. Behavior admired in men is often criticized in women. Even the act of complaining has women labeled as a “Karen” whereas the same objections voiced by men are considered commanding and impactful.

Confidence is belief in your ability to be successful. It does not stem from competence or knowledge or education in which, by the way, women happen to excel. It is the freedom from self doubt, from the feeling of not being good enough and from the need to second-guess oneself.

Think long and hard about your reactions to even the smallest decisions. Do you make them decisively or hesitantly? For a gauge on your level of confidence, take the Confidence Code quiz. You can access it here:  https://learnconfidencecode.com/about-quiz/

Step 2: Understand That Overthinking Is Not Your Friend

Being stuck on the hamster wheel of decision making means going round and round and getting nowhere fast. Overthinking or analysis paralysis does not lead anywhere, least of all to the action you need to take to solve problems or accomplish what needs to be done. This is not to be confused with impulsive action or reckless behavior. Right action stems from confidence in your ability to be successful.

Confidence begets action and action begets confidence. The more you act, whether successful or not, the more confident you become in decision making and acting upon those decisions.

When you find your mind rehashing the pros and cons of any decision, stop. Remember doing something beats doing nothing. By taking action, you will either fail or succeed. If you succeed then woohoo! If you fail then you have the opportunity to try something different. If you do nothing, you have gotten nowhere.

Step 3: Abandon Perfectionism

Perfectionism has been a lifelong issue for me personally. I strove for all A’s throughout school and still write and rewrite every article or blog post. So to combat my tendency toward perfectionism, I’ve adopted a mantra which I first heard in the movie Wag the Dog: A good plan today is better than a great plan tomorrow.

Perfection is unattainable. Yes, unattainable. Women bathe in the aura of perfectionism. It stems from a feeling that even good is never good enough.

Self-doubt and the need to over prepare feed perfectionism. As one of four sisters and having raised 3 sons I often saw the difference between men and women in this regard. I remember my son and his friend discussing the grade he received on an exam which was pass/fail.

He received a 71 (70 was passing) and his friend looked at him and asked, “Why did you over study?”, after which they both howled with laughter. I don’t recall ever experiencing a similar situation among women where just barely passing was something to be admired.

Perfectionism is the enemy of action. Adopt a mantra that encourages you to abandon perfectionism.

Step 4: Focus On What You Can Control

Investing involves numerous components which may be intimidating at first. The stock market comes with risk and trying to figure out the best way to invest is made even more confusing by the continuous barrage of headlines and advice from print and social media. You can’t control stock or bond market performance but there are things you can control.

Generating wealth should be based on your goals and the purpose for the money. If you are 30 and saving for retirement, an appropriate investment portfolio will almost certainly look different from one for a person in their 70’s who is already retired. So you can control your investment plan and the amount of risk you take.

You can also control the amount of diversification in a portfolio which should encompass different asset classes, countries, asset types and with bonds, duration and issuers. Staying disciplined through market dips and swings is also under your control.

Avoid making investment changes based on short term market fluctuations. A good advisor can really help you discover what financial actions are best for you.

Step 5: Find A Professional Advisor Who Will Help

In the new normal we are all experiencing, it has become increasingly less important for you to find an advisor to meet in person. Video technology has improved and we have all become accustomed to using the new technology so finding an advisor who is a good match for you can move beyond your current location and it should.

In the new normal we are all experiencing, it has become increasingly less important for you to find an advisor to meet in person. Video technology has improved and we have all become accustomed to using the new technology so finding an advisor who is a good match for you can move beyond your current location and it should.

My booklet called “7 Warning Signs That You Are Working with the Wrong Advisor” which you can download here, discusses the importance of finding an advisor who takes time to learn about you and your concerns.

Not surprisingly, 75% of women feel misunderstood by their wealth manager. But it doesn’t need to be that way. There are advisors who will help guide you financially and educate you about your financial situation so you feel confident that you are making the right decisions about your future. Take the time to find an advisor who connects with you and you with them.

The last section in the book, The Confidence Code is titled: “Think less. Take Action. Be Authentic.” which provides a succinct summary of how to move forward.  Confidence in taking the right financial path is attainable for all of us.

What’s Next?

Why is gaining confidence in your financial future so important? Here are the facts: 95% of women will eventually be their family’s primary financial decision maker. In addition, by the year 2030, it is estimated that 66% of the nation’s wealth will be controlled by women.

Currently, women constitute 48% of all millionaires in the US. Having the confidence to take the right action in managing financial resources will have a lasting impact on the financial wellbeing of women and society.

In conclusion, it’s simply not enough to have goals. You have to be ready to make it happen. Becoming confident in your retirement plan can help you overcome investment hesitancy and empower your ability to make necessary financial decisions for you and your entire family’s future.

About the Author

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Lorraine Ell

CEO and Senior Financial Advisor

As the CEO and co-owner of Better Money Decisions (B$D) Lorraine is excited to help others solve challenging financial problems. For those experiencing dramatic change such as divorce, retirement, or the loss of a loved one she is a dedicated advisor and acts as equal parts investment manager, financial planner, coach, and personal guide. It’s her mission to help families lead their best financial lives.

Author of the book, Bozos, Monsters and Whiz-bangs: Bad advice From Financial Advisors and How to Avoid it!, Lorraine is also frequently quoted in MarketWatch, Investment News, Investor’s Business Daily, Yahoo Finance, and The Wall Street Journal.

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