The rise of female millionaires: Three lessons investors can't afford to miss

Over the past decade, Australian women have become millionaires at nearly twice the rate of men, according to JBWere.

Globally, women's financial influence has also grown more rapidly than their male counterparts, with female-controlled wealth rising by more than 50%.

With Australia on the precipice of an historic intergenerational wealth transfer, this trend is expected to continue. Women are set to inherit and manage over 65% of the $4.9 trillion wealth transfer in Australia, becoming stewards of family wealth and long-term financial decisions.

Younger generations of women are also proactively boosting their financial acumen and investing more actively to grow their wealth.

As women become an increasingly important part of the investment landscape, there are many lessons to be learnt from this active and engaged investing cohort. Yet, behavioural biases, alongside lower confidence levels, present challenges along the way.

Lesson 1: Knowledge is power

In my role, I work with some of Australia's most successful investors, those who trade significant volumes with portfolio balances up to seven figures.

Over the past five years, female representation among these high-net-worth clients has almost doubled.

What might come as a surprise is that even among this sophisticated cohort, female investors frequently lack exposure to the technical analysis and market timing strategies that their male counterparts have honed over decades.

The reason is straightforward: women are typically entering the market later. While many male investors began trading in their youth, many women I speak with only began investing in the last five years.

The pandemic created a perfect storm - more time at home, better access to online education and heightened awareness of financial security. But a late start means fewer market cycles to learn from and less confidence navigating volatility.

Add to that the time pressures many women face with traditional caregiving duties, there's often limited bandwidth to consistently follow market indicators or trade actively.

Tailored educational content and digital tools can help strengthen financial literacy and support women seeking to learn more about investing. Dedicated professional support and guidance can also boost confidence for female financial decision makers.

Lesson 2: A patient focus on the long-term

Despite starting later, women have developed investing approaches that can deliver outperformance over the long-term.

In my experience, I have observed that male investors can be reactive, short-term focused risk takers, while women are typically patient and deliberate over the long-term.

They typically favour blue-chip stocks and dividend payers, building more balanced portfolios they're comfortable holding for years.

In volatile markets, this is a strength.

While men are often shown to chase trends or double down on risky positions, women clear the noise. They hold steady when others panic.

This discipline can pay off. For example, over 20 years, a model $100,000 portfolio with consistent annual growth of 7% p.a. would be worth approximately $387,000.

Bolstering this performance by just 0.5% p.a. can see this increase to $424,000 - that's an extra $38,000 return.

While women bring a wide range of investing styles - many are patient and disciplined, while others are confident and opportunistic - they share a dedication to methodical research.

This focus on fundamentals - earnings, valuations, business metrics - provides the confidence to stay the course.

Lesson 3: The cost of caution

But every strategy has its season, and at times, caution can carry a cost.

Currently, broader equity markets are showing signs of strength, with valuations in some large-cap stocks appearing elevated relative to historical averages.

This market dynamic has resulted in many women sitting on the sidelines, waiting for a pullback that may never come. They think, "It's too expensive now, I'll wait for a better entry". Meanwhile, others ride the momentum and capture the gains.

There's also a strong home bias. Australian women tend to focus on the ASX top 200, limiting diversification. Comfort with familiar markets is natural, but over-concentration at home can mean missed opportunities.

By contrast, many of my female, international clients are more comfortable maintaining globally diversified portfolios. For example, my Mandarin-speaking clients often incorporate exposure to Hong Kong, US and Japanese equities.

Overconfidence can hurt portfolios just as much as excessive caution can hold them back. The key is adding new tools to help make informed decisions in line with your risk appetite.

The future of investing

The future of investing won't belong solely to aggressive momentum traders or ultra-cautious buy-and-hold investors.

Rather, those who combine the best of both worlds - the discipline and patience of women, combined with the agility and confidence of men - will have a strategic advantage navigating an increasingly uncertain market environment.

With females becoming high-net-worth investors at nearly twice the rate of men, it will be imperative to arm them with the knowledge, tools, and frameworks needed to grow portfolios, ask sharper questions and back their own judgment.

The more women investing, the faster collective experience and confidence will grow. That same momentum is visible within the industry too, with a growing number of women professionals entering financial services.

With the largest intergenerational wealth transfer on record underway, the real test will be whether this current momentum can continue to build. From where I stand, I'm confident it will.

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