90% of Women Manage Their Own Finances
In part one of our program, I stated that 90% of women will have to manage their personal finances on their own at some point in their life and that is why it is imperative for women to develop a solid understanding of how to manage their money which includes being better investors.
Men Are More Trigger Happy
I also stated that men tend to be more “trigger-happy” and generally take more risk. Men may also show more overconfidence than women in investing. Overconfidence can lead men to take on too much risk and invest in companies they really don’t know.
So, what exactly can men learn from women when it comes to being better investors?
Men Are Overconfident
Men have a tendency to believe their interpretations of news and market movements is sound and feel they can make profitable trading decisions, but this isn’t as true as they may think.
By contrast, women are more likely to recognize and acknowledge when they don’t know something. If they don’t feel they know a company well enough to invest in it, they do more research or wait for a more suitable investment.
Men Trade More Than Women
Men trade 45 percent more than women.2 Research found that men trade more excessively than women, which can be attributed to overconfidence which leads to lower returns.3
Most of the time the negative impact on returns is because of the fees an investor pays when trades are made in a person’s investment portfolio. More trades means higher fees which lower the total return in the investment account.
More Trades Lowers Returns
Generally speaking, men seem to have the need to monitor investments on a daily basis and reacting on short-term fluctuations in stock market performance most often leads to negative outcomes.
Women Are More Patient
In general, women may be better investors because they have more patience when it comes to investing, which can be a benefit over the long term. “Women are more likely to give their investments time to grow. This is important because checking returns and acting on short-term fluctuations in stock performance leads to negative outcomes,” Sussman says.
Men Need More Patience
Consequently, Sussman believes that men could borrow a page from the patience playbook as there may be no need to monitor retirement investments on a daily basis.
So, I must conclude that women are really more capable than they give themselves credit for. They are better investors in the stock market because they are more likely to recognize and acknowledge when they don’t know something, will do the necessary research to determine if the investment is good or bad.
And, most importantly, women have the patience to ride out the ups and downs of today’s volatile markets and more likely to give their investments time to grow.
Gender Really Doesn’t Matter for Better Investors
This debate is going to rage on for years to come. At the end of the day, gender doesn’t really make a difference. The best investors will be the ones who get the fundamentals down from the start.
I would like to thank you for your interest in our educational programs and materials. Please go to www.LifeCrafter.org for additional help with your financial needs.
### Larry Marvin
LifeCrafter – Money $ense
