Are women better or more cautious investors?

Are women better investors? What makes them different when it comes to investment? How do their portfolios work? In a month of March dedicated to women, we look at how women manage to turn their studies upside down and celebrate remarkable investment decisions. How do they ultimately reach their financial goals?

Are women, after all, better investors, just by their nature or by the financial education they access more often than men?

Because what can affect your performance as an investor, regardless of gender, is not your ability to analyze financial statements, but your emotions, personality, or lack of financial education.

According to a Fidelity 2021 study of more than 8 million clients, women generated investment returns that were 40 points (0.4%) higher than men’s returns.

In 2021, 67% of women worldwide invested well beyond a simple retirement plan or real estate purchases, up from 44% in 2018.

Gender pluses and minuses in investing

• Women are not as confident as men in their investment skills
• Women’s investment portfolios are up to 44% smaller than men’s due to the pay gap

Instead:

• Women achieve better investment returns than men, with studies finding differences of up to almost 1%
• Women start investing much earlier
• A growing number of women are investing and have increasingly diversified portfolios

The CFA Institute also predicted that by 2025 there will be no significant gender gap, at least in terms of stock market investing.

One of the most interesting findings is that investing is increasingly common among younger women. Fidelity shows us concluding numbers: 71 percent of millennial women were already investing in 2021 compared to 67 percent of Generation X and 62 percent of baby boomers.

Those extra years of investment make a huge difference. If we take for example the case of compound interest that we have been talking about, women investors have achieved higher returns.

The key to successful investing is to remember that you better be in it for the long haul.

Example:

Frequent buying and selling is not an investment. It’s called trading. Women are less likely to do this.
For example…you own shares, so you own part of a real business. Just because someone is constantly putting a price on your stock doesn’t mean you have to act, sell or buy. Even in this case, women are more cautious.

Men’s investment confidence leads them to trade more frequently. There is a negative correlation between returns and trading frequency. According to a study by Barber and Odean, men trade stocks 45% more than women. This excessive financial flip-flopping reduced their net returns by 2.65%. Single men also trade 67% more than single women.

Interesting, right?

Men tend to be more confident than women when it comes to investing. Women are always more willing to admit that they do not know everything and that it is not a weakness to ask for the help of a financial coach or to document more before a major decision.

Women put more time and effort into researching possible investments, looking at every angle and detail, as well as considering alternative points of view. Women who have access to financial education are more likely to make smarter decisions. In the long run, these decisions lead them to long-term incredible financial results.

Not only are women more likely to seek help from a financial coach, but they listen to recommendations for the right financial path for them and turn to the coach whenever they have doubts about their financial decisions.

There are so many books on finance and investing that it’s easy to get overwhelmed. For more clarity, see my list of recommendations.

All investments involve risk. It’s their nature. However, there is no need to take more risks than necessary.

When it comes to their portfolios, women are more risk-averse when it comes to investing their hard-earned money. They tend to stick to what they know best.

Based on very clear financial goals (a comfortable retirement, children’s education, a house) women tend to build more suitable portfolios. Studies have found: Women have created more diversified and balanced portfolios over the past 5–6 years.

When it comes to investing, women tend to constantly educate themselves, create a plan, and stick to it.

They live 6–8 years longer than men, unfortunately, earn less than their male counterparts, and are prone to more career breaks.

I hope I have convinced you ladies that you are ready to invest successfully, but also that the right time is now! I am looking forward to hearing from you soon. Let me create a personalized investment path, keeping the love of investing and saving!