WHY WOMEN SHOULD INVEST IN THE STOCK MARKET AND THE ENDLESS OPPORTUNITIES AVAILABLE TO THEM

By Joanne Kabiru, Associate Director, Brokerage Operations, EFG Hermes Kenya

Studies show women investors earn higher returns than men when given the same opportunities. During these uncertain times of high inflation and falling stock prices, there is an opportunity for all women in our society to start their journey to achieve financial security.
The Russia – Ukraine war has disrupted the global supply of agricultural products like wheat and oilseeds, ingredients for staple foods like bread, and cooking oil. Food, gas, and oil trade restrictions by the European Union and the United States have exacerbated the situation. In Kenya, food prices were already rising due to the ongoing drought.
Data from the Kenya National Bureau of Statistics shows the annual inflation rate in Kenya accelerated to 7.1% in May, from 6.5% in the previous month. It was the highest reading since February 2020, as food costs rose sharply (12.4% vs 12.2% in April).

Stock markets fall as investors shift to safer assets after Central Banks increased their interest rates to reduce inflation. Investors are used to a certain amount of volatility and risk. However, unpredicted events and uncertainty about their economic impact cause them to shift funds to more predictable assets such as low-interest fixed-income bank deposits, government-issued treasury bills, and bonds, whose payments are more or less guaranteed.

The problem arises when you do not have an investment strategy to ensure invested funds are generating above-inflation returns to meet higher living costs for one, five, ten, and twenty years in the future.
Women need to be able to achieve a sense of financial equality in their lives, and having the right investment skills is key to becoming independent.

Historically, cultural bias across the globe has placed men as the primary breadwinners for their families. It has meant that the financial services sector has prioritized promoting financial literacy amongst men. Instead of being provided with all the investment options, women are presented with the safest option. Despite this, there is growing evidence that women make better investors than their male counterparts. According to a Forbes article entitled “Why Women Make Better Investors” by Emily Guy Birken and Benjamin Curry, studies show that women spend more time researching their investment choices. And while they do take on less risk than men when it comes to investing, that doesn’t mean they are risk-averse. They are more likely to take appropriate risks with their investments than men. Both of these findings make for better investing outcomes.

Women are more likely to set the goals they wish to accomplish with their investment funds and think longer term. They ask more questions and plan what they want to do with their investment funds. However, the Fidelity Investments’ 2021 Women and Investing Study showed that women still hold too much cash and may miss out on future growth.

At EFG Hermes Kenya, we believe that a financially empowered woman will impact herself and future generations. Recently, we hosted an event for women investors called She Makes Money Moves. We found that more and more Kenyan women are taking control of their finances. They are becoming more confident in taking informed risks and want financial products and advice tailored to their life circumstances.
Investing consistently over long periods means your principal and what it earns (capital gains, dividends, and interest) combine to generate more value. Regularly investing as little as Ksh.100 ($1) in our stock market, you can activate the power of compounding by reinvesting the dividends you receive from your shares into the stock market. For those investors with a medium to long-term view, investing in the heavily discounted shares of well-run companies trading on the NSE presents an opportunity to accelerate your journey to financial freedom.