Women make better investors

They trade less – but trade smarter

In general, women are less likely to engage in short term trades compared to men. A study by the University of California, Berkeley, published in the Quarterly Journal of Economics found that men make 45% more trades than women.

The more you trade, the more likely you are to eat into your returns paying trading fees. On the flip side, sticking to a fixed portfolio of stable, low-yielding assets, helps to increase the stability of investment habits, and keeps you from making impulsive investment decisions.

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They buy and hold their nerve

Women have long-term goals, which guide their investing habits. They are known as “buy and hold” investors, who are saving up for milestones such as their child’s university education and their own retirement.

Based on a national survey[²] conducted by financial services firm LPL Financial, women investors tend to research potential investments in depth before deciding on their asset allocations to ensure they can benefit from better portfolio returns.

A study co-authored by researchers at the University of New South Wales and University of Sydney Business School also revealed that women investors are more likely to follow stable trading patterns, buying underpriced stocks and selling overpriced stocks over both short- and long-term periods, [³] making the most of the opportunities offered by fluctuating markets.

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They use empathy

The same study by the University of California, Berkeley, highlights how neuro-economists have found women to be more empathetic and tuned in to cues. This, they say, may enable them to enjoy greater trading intuition.

They are not afraid to ask for help

Women’s investment success may be in part to their willingness to ask for expert help. Research by financial services company Fidelity revealed that close to 10% more women used professionally managed accounts compared to men. Among male investors, 64% preferred to manage their own investments [⁴]  .

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Reference:

[¹] Harvard Business Review article: https://hbr.org/2015/08/women-in-asia-are-more-financially-savvy-than-women-in-the-u-s

[²] LPL Financial whitepaper: https://blog.amcpros.com/wp-content/LPL_Financial_Whitepaper.pdf

[³] SSRN eLibrary: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2826444

[⁴] Wall Street Journal article: https://www.wsj.com/articles/male-investors-vs-female-investors-how-do-they-compare-1430709406