3 Reasons Moms Make Awesome Investors

Here's why you want to pay attention to this household CFO.

May 11, 2014 at 11:00AM

Millions of mothers will be deservedly doted on and celebrated this Mother's Day weekend. Moms provide us with love, support, and encouragement. They also give us plenty of advice (solicited or otherwise). But when it comes to finances, studies show we shouldn't ignore Mom's pearls of wisdom.

Ruler of the pocketbook
Women control roughly $20 trillion in global consumer spending each year. They have the final say in 91% of home purchases, 80% of health care choices, and 66% of computer purchases. And their control of the purse strings will likely continue. By overseeing so much wealth, women have certainly picked up a thing or two about finances.

Here are three reasons women make great investors.

1. Women tend to stay the course during choppy markets
Vanguard analyzed the activities in nearly 3 million IRA accounts during the 2008 and 2009 financial crisis in an effort to see how individual investors reacted to the crash -- in particular whether they sold out of the stock market entirely in the midst of its volatility in 2008. The fund company found that women were 10% more likely to leave their stock portfolios intact, rather than selling at the market's low point.

Hunkering down and riding out the turbulence in the financial markets rewarded investors handsomely. Those who stayed invested in the broad stock market through the crash and the ensuing recovery more than doubled their money. Meanwhile, many investors who sold at the bottom of the market took huge losses and are still sitting on the sidelines now as the market hits new all-time highs.

2. Women focus on comprehensive planning
Sure, Mom likes making money in the stock market. But that's not where financial planning ends for her. Instead of zeroing in solely on investment returns, women tend to take a holistic approach to financial planning, as they are often left to deal with tough issues like long-term care for loved ones and estate planning, given that they tend to outlive their spouses.

A 2012 Fidelity Millionaire Outlook study found that among married millionaires who were the sole financial decision-makers in their households, there were key differences between men and women. Among those who worked with financial advisors, women were found to be nearly twice as likely to seek holistic financial guidance to help them achieve a specific lifestyle or goal. Meanwhile, men were nearly twice as likely to indicate that they were interested in achieving the greatest return on investment.

Sensational returns are great. But it's not prudent to invest with the sole aim of finding the next home-run stock. Aggressively pursuing high returns without carefully weighing the risks and considering our personal financial goals can set us up to crash and burn.

3. Women save more of their income
A Fidelity study points out that women, who make less money on average than their male counterparts, save a greater portion of their income. On average, women defer 8.3% of their salary for retirement savings, while men defer an average of 7.9%. And a recent study by ADP Research Institute revealed that more women are saving than men. In addition, the Institute found that, across most income levels, women save at a higher rate than men. For example, in the $60,000 to $80,000 compensation level, 74% of women saved money for retirement, compared to 66% of men.

So while Mom may not bring home as much money as Dad, she certainly knows how to use it wisely.

Foolish final thoughts
Take time this Mother's Day to thank Mom for all she does. Tell her how much you appreciate her advice (even though you may not always take it to heart). Buy her some flowers and take her to brunch. Just don't forget to bring your retirement account statement along to have this household CFO take a look!


Follow Nicole Seghetti on Twitter @NicoleSeghetti. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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