Men vs. Women: How to Be the Best Investor

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What Makes a Woman a Better Investor?

Women are more risk averse. As was found in the Personal Capital gender study, women in general are more risk averse than men. This finding is supported by a growing body of research. Starting from wearing seat belts to choosing investments in their portfolio, women tend to favor safer options even with lower returns than riskier options with potential high returns.

Women do their homework. Male investors, in general, are overconfident. On the other hand, women are skeptical investors. Women are also more willing to acknowledge when they don’t know something. That leads to them doing more homework before investing.

Source: Women & Investing, Gender differences in investment behavior. FINRA Report August 2006

Source: Women & Investing, Gender differences in investment behavior. FINRA Report August 2006

Women trade less. The same study that focused on overconfidence in men also documented that, as a result of that overconfidence, men tend to trade more than women. In fact, men trade 45 percent more than women and that reduces their net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women.

Women take more time to make investment decisions. A 2012 Investment News survey of 323 financial advisors found that women tend to take more time to evaluate investment choices and make decisions. They also focus on long term strategies rather than short term gains.

Women are more pessimistic. They are more pessimistic about the probability of high likelihood gains when compared to men. So, in general, they stay away from “hot” stocks.

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