Are Women Better Stock Investors Than Men?
Are women better stock investors than men? Yes! Several studies have demonstrated that women earn higher returns than men investing in stocks! Women have a different approach to investing than men do. This article will discuss the advantages women have over men in the investment world.
And, hopefully, the article will also achieve its’ intended purpose which is to get more women investing in stocks! It makes little sense that today Wall Street is dominated by men when studies have proven that women are better investors!
Women Earn Higher Returns Than Men
Several studies have indicated that women earn higher returns on their investments than their male counterparts. One study of data, by Fidelity Investments in 2017, discovered this fact. Another study by academics Odean and Barber disclosed that women investors earned higher returns than men! In addition, more research, performed by the Wells Fargo Investment Institute, stated the following: “In a study covering the period January 2016 to December 2020, female-led accounts achieved higher absolute returns than male-led accounts for the five-year period.”
One reason women earn higher returns is that women investors are more patient than men! Women realize that constant buying and selling of their stocks “only” serves to reduce their returns. This “low” turnover in their portfolios “saves” them not only brokerage fees but also taxes…both of which can eat into their returns!
Men Tend To Make More Trades Than Women
Men, on the other hand, are more likely to make trades than women. They buy and sell their stocks much more frequently. Trading in this manner increases their transaction costs and only serves to reduce their returns! This “constant” buying and selling is costly and often unnecessary. One contributing factor could be due to male overconfidence.
Many women think long-term and use a “buy and hold” strategy. They are willing to hold onto their stocks for more than a year. This gives them the advantage of “long-term” capital gains. These gains serve to decrease their tax liability…resulting in fewer taxes to pay. Short-term capital gains, on the other hand, are taxed at a “normal” tax rate. This could result in a larger tax liability. Not a good deal!
Women Investors Shun Risk More Than Men
Women investors do not take as much risk as men. However, they do realize that all investing involves risk! Women do everything in their power to limit and manage this risk. Taking less risk and not selling, (or buying) prematurely, pays off for the female stock investor over the long-term.
Women also tend to take a more conservative approach when investing than men. This includes studying the risks involved and then doing “thorough” research on the underlying company before they buy!
Women Tend To Not Give Into Peer Pressure
The woman investor, also, does not have a tendency to give in to peer pressure…as many men are inclined to do. Men have a tendency to compete with other men when investing. Women prefer to think for themselves…often shunning “others” advice. Most women will make their “own” investment decisions based on careful research and their very well thought-out goals. Women realize how important research is and take the time to do their homework.
In conclusion, women have indeed outperformed men in the investment arena! Studies have shown women’s investments do earn more annually than their male counterparts. Women also take fewer risks and realize that patience is key when investing.
And, more women today should be investing in stocks! Men still rule over Wall Street however, numerous studies show women achieve superior results. Investing in stocks should no longer be a field dominated by men when women clearly have an investing advantage over men! Women are indeed “gifted” stock investors!
