Which Gender is the Better at Investing?

It’s fair to say that the broader finance game is a bit of a boys club, but when it comes to everyday investing, both men and women are getting involved.

The question that everyone likes to ponder, of course, is which gender does it better? Sure, men are often seen as the investment gurus, but that doesn’t mean that women aren’t killing it too.

Of course, gender in no way defines the success that an investor will achieve, but it is interesting to note the differences in their respective investment habits and strategies.

Let’s have a look at the differences.


Confidence


This is an important aspect of investment, as it’s our emotions and confidence that will dictate the decisions we make. The more overconfident we are, the more susceptible to risks we become.

Male investors are often seen as overconfident and can overestimate their investment abilities, while women tend to be more cautious.

Caution can pay off.

A report by Merrill Lynch Wealth Management that compared data from 11,500 investment personality assessments revealed that 55% of women either agreed or strongly agreed with the statement, “I know less than the average investor about financial markets and investing in general.” Only 27% of men answered the same.

Either aspect has its benefits. More risk means more reward should your investment take off, but caution will ensure a safe bet with modest returns.


Advice


Going back to the previous study, it’s clear that women are much more likely than men to seek financial advice, whereas men are happy to be a “do-it-yourselfer.”

In a US study conducted by Fidelity that used data from 13 million people in corporate retirement plans, it found that “42% of women used professionally managed accounts, compared with 36% of men—the other 64% of men were designated “do-it-yourselfers.”

The biggest divide between the genders is often the knowledge that they perceive they have, says Forbes.

“Men also report that they spend more time learning about investing than women report that they do. When it comes to investing, men are more apt to believe that they know more than they really do while women often do know more then they believe they know.”


Patience


Investing is a long term game, but men want the returns now and they want them big. Women on the other hand usually expect smaller returns and leave their money in one place for longer periods of time.

By moving your money more often, you become more susceptible to trading at the wrong time and hence, losing more money than you would by simply leaving it where it is. It also costs you brokerage fees when doing so.

If we use an example from the US, there isn’t a big difference in outcome between the genders. “Vanguard, record-keeper for more than 5,000 defined-contribution retirement plans, found that women earned an average annual total return of 9.7% for the five years through 2014, compared with 10.1% for men.”

At the end of the day, it’s less about who has the better results and more about what we can learn from the differences in investment strategies, as well as closing the gap on financial literacy between the genders.