FINANCIAL FOCUS: ARE WOMEN MORE CAUTIOUS INVESTORS? (SECOND OF A TWO-PART SERIES)

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

To be a successful investor, you need to be knowledgeable. If you're well-informed about the financial markets, and if you're familiar with different investment alternatives, you will have the confidence you need to make the right choices. In the investment world, knowledge is power.

And that's why it's especially important for women to learn as much as they can about investing. Some studies show that women tend to take fewer chances with investments than men. This tendency leads many women to pursue so-called "safe" investments -- at the risk of losing out on higher long-term returns. By increasing their knowledge -- and their faith in their own financial acumen -- women will be free to choose from the full range of investment alternatives.

Just how much different are women's investment attitudes from men's? They're a lot different. In fact, 63 percent of women are only comfortable with guaranteed investments, compared to just 41 percent of men, according to one major study conducted by a leading financial services firm. Consequently, women often have a larger percentage of bonds, certificates of deposit, money market funds and other low-risk investments in their portfolios.

Women who purchase these 'less risky' types of investments will almost certainly protect their principal, but they also encounter another type of risk: the risk of inflation. Although inflation has been very low the past few years, it has not disappeared from the investment horizon. Over time, even a relatively low rate of inflation can seriously erode the purchasing power of fixed-rate investments. That's why bonds, certificates of deposit and similar vehicles might be appropriate for short-term financial goals but inappropriate for longer-term ones, such as retirement or paying for a child's college education.

Should women then throw all caution to the winds when investing? Of course not, but they should choose a diversified mix of investments that are suitable for their individual financial goals.

Fortunately, women do have one major advantage when it comes to investing: they are generally more likely than men to ask for investment guidance from professionals, and people who work with investment professionals tend to invest regularly, save more, manage their debt better and have more confidence about their future.

Still, even women who do work with investment professionals should educate themselves on the tenets of investing. A good understanding of investment basics is essential to a productive relationship with any financial consultant.

There are legitimate gender differences in many walks of life. Women and men do approach some things differently, but important investment decisions should be based on our knowledge -- not our chromosomes.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.