Between age-old ideas about gender roles and general uncertainty about the process, many women have been reluctant to take on the role of family finance manager - even when their contributions to the family income are significant and they make a majority of the spending decisions.
"We have been taught that it's a man's job, even if the man can't do it well, he (pretends) to take on the responsibility," says Marina Kuperman Villatoro, CEO of The Trader Chick.
Kuperman, who created her site to inspire, encourage and educate women on smart investing, adds that one of the biggest reason women shy away from managing money is fear and not knowing where to begin.
"Most sites and education are made to sound so intimidating and difficult," she says. "And the stigma with investing is that it's risky and a gamble, when there is probably as much gamble and risk when get a job."
In reality, if you know what you're doing, you can earn at least 20 times more on your money than you can if you had your cash in the bank, she says.
Marina recently caught up with us to share why she thinks women make great investors and offer advice on where to get started. Here's what she had to say:
Tell us about how you became The Trader Chick...what got you interested in personal finance?
When I started my investing journey, I found the field to be dominated by experts (usually men) using super complicated terms and making the process not only difficult, but also quite isolating for women. As in, when men give each other advice, they really get into the investing process. Yet, for women the advice is always, let your husband/boyfriend/father help you or just give it to a financial manager - immediately discounting the fact that we can do it as well, if not better, than them.
However, when I was studying to become a full-time day trader, that's when I really felt like the odd fish in the pond. There are simply no resources or communities or help for women. And I really felt a need to start a home where women can learn simply (because investing and trading isn't difficult, it's not easy, but so doable and shouldn't be something to fear).
Plus, the emotional roller coaster that goes with it is much easier with support, and women are natural supporters and we function better in a community. Which is exactly the goal for my site, along with helping women take the first steps to take control of their money!
Why do you think women should care and take an active role in how their family manages money - from what they buy to how they invest?
Aside the fact that over 50 percent of households these days are not only run by women, but also that women are earning more than their partners, we simply handle our finances differently.
Our goals are to have money for our families, save for the future, to be prepared. And also to treat ourselves to trips, luxury outings and have a good time.
Since our main focus is security, we go about handling our money more cautiously, and in the long run, that actually brings in higher returns.
What steps do you think women can take to be more involved with their family's finances?
First of all, they need to know what the bills are of the household. My mother still has no idea what any of the bills are, and I'm not talking about mortgages and insurance payments. I'm referring to cable bills, gas and electricity, food and everything else.
Basically, they need to become fully accountable for where the money goes. And, just as importantly, how much comes in. This way, they know how much to put aside for investments.
Once they understand this and know how much money to use for investments, then the fun can start.
Why do you think men tend to dominate the field of personal finance?
It's a cultural thing - the "bring-home-the-bacon" pattern is on a cellular level for us. It will take time for us to move in the right direction. And the best way to do that is to start getting over the fear since the "experts" can be quite scary with their big words and overdramatic speculations.
What do you think women can bring to the table in this field?
Caution, understanding and patience. I'm not at all patient (as most women are), but I also know that in long-term investing, you simply need to be cautious, do your homework and then step back (be patient) but not absent. Women can do that well.
Unfortunately, we are ruled by fears which men have a lot less of, but that is a blessing because it makes us do our due diligence that much more and our choices are usually great long-term earners.
What are some of your favorite investments for women who are new to it?
To gain confidence, I would recommend entering the investing arena with the safest types of investments - fixed income bonds and dividend companies (aristocrat dividend ones to start with).
I totally understand there are way too many options to choose from, even with the safe ones, that's why I'm a huge lover of ETFs (exchange traded funds). These are your absolute best bet. You can find great ETFs that hold stocks in many of the dividend companies with a great dividend yield. Also, the fixed income ETFs bring a solid profit, and you can screen out all the crappy ones quite quickly.
What types of investments would you recommend we stay clear of?
Following hype can become a deathtrap in investing. When something feels too good, it really is too good to be true. I would highly recommend staying away from any stocks or bonds or funds that offer a high dividend yield (over 6 percent, you really need to do your homework on why it is so high). Stay away from start-ups. I know, you are thinking what if it's the next Microsoft or Facebook. But realistically speaking, for each of those successful companies, 100 fail. It's best to wait to know for sure if it will make it once it stabilizes and the fundamentals are in place.
What are some best practices for managing our investments? Good habits to get into? Bad habits to ditch?
Diversification is key to healthy investing and portfolios. It is easy to put all your money in one basket, but that is also a good way to lose.
Before you start, figure out if you are more of a conservative investor or lean more towards aggressive type of investing. This will immediately allow you to figure out the best plan. Example: Conservative investors have more money in fixed income funds and bonds.
But the best advice I will offer: Before you commit to investing your money into any company or fund, do it because you understand that it will bring you returns, not because someone recommended it or the news of the day makes it a hot buy. You are in it for the long run; that means good decisions will keep your buy strong even if it goes down on some days and up on others. You have to do your homework first and foremost.
You also blog about living as an American mom in Central America on Expat Mama...how has living overseas changed your perspective on money management?
One of the greatest differences U.S. citizens and Central Americans have is their absolute opposite takes on money. For the most part, we are taught, in the U.S., to save and invest our money because that is how it will work for us. In Central America, it is a check-to-check society, no matter what your income level is. If you only put away 10 percent of your paycheck, you can start to have a nest egg for yourselves and your family. This, in turn, gives you a peace of heart.
My husband is Guatemalan, and being able to show him this and help him understand about managing money, not spending it all the minute you get it, has changed our lives completely.
Thank you so much for having me on your site! If any women want to learn more on how to start investing, I offer free 30-minute consultation sessions to get them started on the right path. I would love to help them get past the fear and simply take the first step.