(Un)Popular Opinion: Women Are Better Investors Than Men

Women really do better when choosing stocks and making long-term investments, despite the fact that the investment sector is heavily skewed toward men.

Both Goldman and Sachs were men. Jordan Belfort, the Wolf of Wall Street, was a man too. And if we look at the list of the biggest names in finance (John Paulson, Warren Buffett, James Simons, Ray Dalio, Carl Icahn, and Dan Loeb) they’re all men too. Yet somehow, when it comes down to it, in the “real world”, women are far superior at coming up with a productive way to create wealth.

A study by Fidelity shows that over a 10-year period, its female customers earned, on average, 0.4 percentage points more annually than their male counterparts. It might not look like a lot, but it does amount to tens of thousands of dollars (or more) over a few decades. The study covered 5.2 million client accounts between 2011 and 2020 and examined individual retirement accounts, 529 plans, and basic brokerage accounts. Women’s trading strategies are what contribute to their higher results. Half as many female Fidelity clients purchased and sold as male customers did.

Additionally, women have made considerable progress in building their wealth in many different ways. Around 67% of female investors saved money outside of retirement accounts, up from 44% in 2018. Nearly 50% of people have saved at least $20,000 outside of their emergency and retirement plans, and 20% have saved as least $100,000. Long-term, these additional savings result in significant assets.

The bottom line?
The only weakness women seem to have is the fact that they don’t believe themselves to be good investors.

So, Why Are Women Better Investors Than Men?

It’s believed that men may trade too frequently (and make mistakes) due to overconfidence. William J. Bernstein, a neurologist and investment pro, believes testosterone to be the culprit. For investors, the hormone results in three issues: it lessens anxiety, boosts greed, and significantly adds to overconfidence. He said that while it improves muscle mass and response speed, it has no effect on judgment.

Other reasons women may be better at investing than men include the following:

1. Women are more patient
   When it comes to investing, women typically have a lot more patience than men do. Women are more willing to give an investment the time it requires to perform well — whether that’s the result of the mothering instinct or a woman’s penchant for loyalty, nobody knows. Men, on the other hand, pay too much attention to quarterly earnings and frequently sell an investment at the first indication of problems. Women are more likely to see the bigger picture and be able to see past immediate issues. This is crucial since many outstanding long-term stock performers experienced horrific drawdowns before becoming successful investors.
2. Women are more willing to admit their mistakes
   Men dislike having to accept their failings. Ask any woman. Men would rather blame the market, short sellers, the US Federal Reserve, a CEO of a company, or basically anything or anyone than acknowledge they were mistaken and shouldn’t have purchased losing stock.
3. Women are more diligent with their research
   According to studies, women actually conduct a lot more research before purchasing stocks. Not all women are financial analysts, but they read more, research businesses as thoroughly as they can, and are aware of the hazards associated with investing. Men just plain don’t.
4. Women are open to advice and collaboration
   Women understand the significance of collaboration, and are more at ease discussing their options with their financial advisers. They tend to be open to learning from others’ differing experiences, knowledge, and investment philosophies.
5. Women are better at multi-tasking and learning new disciplines
   In terms of multitasking, women consistently outperform men. They have proven their adeptness at handling many tasks by managing the house and a full-time career at the same time. They are hyper aware of their responsibilities as a wife, mother, daughter, sister, and working woman, and they make an effort to carry them out no matter what unfortunate circumstance may arises. This ability to stay calm in a crisis is one of the main qualities necessary to be a successful trader or investor.
6. Women have less of a need to prove themselves
   Male investors frequently feel the need to prove something, which is a significant stereotype, I know. Ego stands in the way of successful investing; and that’s a fact. More than once, I have observed some male managers who are adamant that “they are right, and the market is wrong,” frequently to the expense of their whole portfolios. When a stock is impacted, managers that believe in this way frequently double in, potentially amplifying losses when things don’t work out. Male investors tend to take higher risks because of ego, wanting to show that they have the courage to endure with large stock positions. Men are particularly prone to confirmation bias, which is the tendency to only hear reasons that favor one’s viewpoint and ignore other viewpoints despite the fact that every stock trade has an opposite viewpoint, and this is another effect of ego.

We can clearly disprove the urban legend that males make better investors than women thanks to research and actual experience. In reality, we can cite concrete instances and character attributes that demonstrate that female investors are the more powerful sex in the world of investment.

So think about investing like a woman the next time you’re making an investment decision. It might just pay off.