In the book, Unleash the Power of the Female Brain, Dr. Daniel G. Amen, a psychiatrist and brain imaging expert, imaged the brains of 46,000 men and women. He compared the blood flow and activity patterns between male and female brains and found significant differences. In summarizing his finding, Dr. Amen reported that female brains tended to show greater strengths in:
- “Appropriate worry”
Can we use the knowledge of our brain’s strengths to become better investors?
Use Empathy to Guide Investment in a Smart Way
Women tend to be teachers, nurses, and caretakers, because we are great at creating emotional bonds with others. However, this can also lead us to make decisions based on emotion rather than logic. Good investors know that emotions can sometimes get in the way of making smart investment decisions. That is why so many people “buy high and sell low,” when we all know logic tells us to do the opposite. Don’t let empathy lead you into making investment decisions based on fear. Instead, let your empathy guide you to special mutual funds that reflect your personal moral values.
Trust Your Intuition
Women often see things that men don’t even notice. Don’t let that intuition go to waste! If you have a hunch about an investment opportunity, your unconscious brain is trying to tell you something. Invest using money you can afford to lose. (Never make highly risky investments with your retirement or emergency savings money!) Your intuition may just be rewarded.
Collaborate with a Trusted Investment Advisor
If you are hesitant to invest your money for the future, then don’t just sit on the sidelines letting your savings collect a measly interest rate in a savings account. Use your awesome collaboration skills to find an investment advisor who can guide you in putting your savings to work. We women are smart enough to know when to ask to for help, and as a result we will benefit from the advice of experts who can help our money grow more quickly.
Saving Early and Investing for the Long Term
Two of the most critical concepts in investing smart is to start saving for your retirement early and to trust the stock market to provide positive returns in the long-term. Investing almost always rewards the person who shows patience and self-control and usually punishes the panicky investor who takes big risks. Ladies, we are known for our self-control, and now is the time to use it. Make sure you are saving a portion of your income from each paycheck, even if it’s just $5 a day. Keep your money invested and allow compound interest to work its magic.
Don’t Let Worry Ruin Your Investment Strategy
Women are great planners, but we also have a tendency to worry a lot more than our male counterparts. Many times this worry can actually be helpful. It keeps us out of danger (no wonder women have a longer average lifespan then men!) and helps us anticipate problems. However, all that worrying can also hold us back. Many women are fearful of the stock market and have nightmares about losing everything. As a result, they “play it safe” by investing in low-yield bonds or by just stuffing their money into a savings account. Unfortunately, playing it safe may result in too little saved for retirement.
Every person’s brain is different, but when you understand your strengths and weaknesses, especially as related to your perceptions of money, you will be able to utilize your strengths and overcome your weaknesses to become an investor superstar.