Are Women Better Investors Than Men?
If men are from the risk-on side of the investing universe, then women are from somewhere a little more down to earth. When it comes to making investment decisions, gender plays a larger role than many people realize. Women tend to keep the the bigger picture in mind and are not rushed into investments before conducting research or seeking additional help. This can have positive and negative effects on portfolios.
There are three significant ways in which men and women differ on financial decisions, as described in a new analysis by Nelli Oster, PhD, Director and Investment Strategist at BlackRock. First, women tend to focus on longer-term, non-monetary goals. Instead of merely viewing money as a means to purchase something, they consider money to represent independence and security. Second, women are more likely to ask for direction on investments. According to a Prudential study, 44 percent say they usually rely on some input from a professional advisor. In contrast, the majority of men prefer to make financial decisions entirely on their own.
Finally, women tend to be more thorough and take more time to make decisions than men. “Several studies, including a national survey by LPL Financial, show that women tend to research investments in depth before making portfolio decisions, and the process, as a result, tends to take more time,” explained Oster. “Women also tend to be more patient as investors and consult their advisors before adjusting their portfolio positioning, whereas men are more prone to market timing impulses. To gather information, women often prefer group discussions to men’s more independent learning approach.”