A 2006 Charles Schwab survey found that twice as many women as men agreed with the statement “investing is scary for me.” Given the seismic shifts in the financial markets since that time, my guess is, even more women—and a few more men, too, if they’re completely honest—find the investment world a pretty terrifying place.

But here’s the thing: as far as women are concerned, investing belongs in the same category as childbearing, socializing, fundraising, community organization, and consensual leadership. It’s something that women may approach with trepidation, but the reality is they can be darn good at it—better, in fact, than their Squawk Box addicted male friends or partners.

How Women Invest

In 2001, two California professors of behavioral finance, Terence Odean and Brad Barber, did a study of the investment activities of men and women and found that men traded 50 percent more frequently than women. They also were less apt to learn the lessons of former investment mistakes. Though no one has dubbed it so, it sounds to me like a form of investment hyperactivity attention deficit disorder. The professors more kindly called it male “overconfidence.” Whatever the official diagnosis, it costs money. As a result of this affliction, the returns to men’s portfolios trailed those of women’s by 1.4 percent. When the men’s returns were compared to what unmarried women earned on their investments, the gender gap widens further—underperformance of 2.3 percent. If that doesn’t sound significant, let me assure you that the separation between the best and the worst mutual fund managers is often much less.

It’s important to recognize that in the Odean-Barber study everyone was already an investor. However, what about all the women who may have saved money, but never invested it? The women who suffer from investment “stage fright,” making them unable or unwilling to undertake an activity they may in fact be great at? What I often hear from my women clients, would-be stars wilting in the wings, is that there are too many lines to learn and they cannot follow the plot. “I don’t understand how investing works and I don’t have the ______ <pick one: time, interest, math skills> to figure it out.”

But here’s the dirty little secret that most stockbrokers and investment advisors know, but rarely let on: You need to know very little to be successful at investing. In fact, the sooner you accept that you (as well as the stockbroker or the advisor) cannot know or predict how investment markets will perform, the simpler and more rational the investment process becomes.

The EMH of Investing

Call this humility—something that most women get. Fully tenured professors of finance and Nobel Prize winners call it something else—theefficient-market hypothesis (EMH). Some amazingly elegant and stupefying equations, which I was forced to memorize in business school, can be used to prove the hypothesis, but for practical purposes, this is all a wise woman investor needs to know:

• Since you cannot pick investment losers or winners before the fact, don’t bother. Go for the “averages,” or market indexes. Choose index mutual funds or ETFs that simply replicate what the broad markets—the S&P, the non-U.S. stock markets, the U.S. bond markets—are doing. Just be sure to diversify among the averages, or indexes. Don’t bother yourself with stock picks, technical analysis, or ratios. These belong more appropriately in the sandbox of overconfident (and did someone mention underperforming?) investors.
• Rebalance your investments once a year, not with every hiccup or screaming talking head on the evening market report. The key to investment success is buying low and selling high, which as already argued no one can reliably do. However, if you rebalance by cutting back your outperforming investments and adding to your underperforming investments, you are in fact doing just that—and all without a computer or stock charts.
• Keep your investing expenses low. You’ll do this automatically if you stick to indexes. Management expenses are, in fact, the one investment variable you can control, and they can make a significant difference to your returns over time.

With this approach, all the impediments that keep many women from investing—no time, no interest, no technical skills—don’t really matter. You are free to grab the remote from your partner, switch off the investment noise on MSNBC and instead watch American Idol, all the while knowing that you are making money.

You, too, can be wise, without having to be smart.

Eleanor K. H. Blayney, CFP^®, is president of Directions LLC, an online organization dedicated to educating and engaging women in personal finance. She is a licensed Certified Financial Planner and the author of Women's Worth: Finding Your Financial Confidence (2010),which speaks to women about the major financial issues they face, and The Home Budget Workbook (2010), a straightforward guide for creating and maintaining a practical budget. Eleanor is a graduate of Mount Holyoke College and Cambridge University UK, and earned her MBA at the University of Chicago. She belongs to, and has served on the boards of, numerous professional organizations. To learn more about Eleanor, visit herwebsite.

Read more articles by Eleanor Blayney.