Women are Better Investors - That’s a Fact
Whilst the stock market is dominated by men, numerous studies suggest that when women do invest, they come out on top
When you think of investing, you probably have the stereotypical view. Wolf of Wall Street? Loud men yelling in suits? That’s because throughout the decades, it’s typically men taking up the investment space. They’re our equity analysts, stock experts, shareholders, board chairmen, directors and finance experts. Sure, women are increasingly holding positions in the finance world. But the reality is that men make discussion posts and constitute 90% of participants in most share-related groups on social media.
Yet despite taking up much of the investment space, numerous studies reveal some empowering truths for the women out there – that women are, in fact, better investors. You only have to look as far several studies show this, including studies by Warwick Business School and Fidelity.
So let’s break it down.
The Warwick study
Warwick Business School analysed 2,800 investors, both men, and women, over the space of three years. They found that the female investors outperformed the FTSE 100 (an index composed of the 100 largest companies listed on the London Stock Exchange), but also their male counterparts over the three years. The men’s investments outperformed the FTSE 100 by 0.14%. Whereas the women’s investments outperformed the FTSE 100 by 1.94%, that’s 1.80% higher than the men.
In this analysis, lots of different areas were looked at; investments held, trading frequency, and amount of money invested. Huge differences were seen between the genders. For example, women traded nine times a year on average, compared to thirteen times for men.
They also found that men were more likely to pick more speculative stocks and take more risk, whilst the women had more of a long-term investing perspective. Clare Francis, Director for Savings and Investments at Barclays Smart Investor, said: “the difference in performance reveals a more considered approach from women, rather than caution.”
4 reasons women are better investors
Another study was conducted by Hargreaves Lansdown. They analysed their clients which revealed that in three years (August 2014 – August 2017) women outperformed men by an average of 0.81%. If this performance was replicated over 30 years, women would end up with a 25% bigger portfolio. This is a huge percentage!
So what’s the secret? Hargreaves Lansdown found four reasons why women are investment naturals.
1. Women are more likely to have naturally diverse portfolios
A higher percentage of women, than men, have most or all of their portfolios invested in funds. Because they’re invested in funds, the fund managers invest in lots of different companies, diversifying the investment and spreading their risk.
If you needed the final push to invest your money, this is it.
2. Women tend to hold less risky investments
The study showed that women were less likely to invest in riskier assets such as single company shares of small companies. Because of this, women were 50% less likely to experience a loss of 30% or more in this period.
3. Women are more likely to ‘buy and hold’
As we mentioned earlier, women traded less than men and were more likely to invest for the long term. It also means that they do not incur those niggling trading costs that can eat away at your returns if you have dozens of them floating around.
4. Women are more likely to invest through an ISA
By investing in an ISA, the gains and income are tax-free. Industry figures show that women open 20% fewer stocks and shares ISAs than men. Despite this figure, 65% of women invest through an ISA, compared to 58% of men. More women are making the most of this tax-efficient investment.
Women prefer to hold money in cash
Many statistics show women have the money available to invest, but they prioritise cash savings. A study by YouGov found that 55% of UK women said they had never held an investment, compared to 37% of men. However, BlackRock completed a study that found that 68% of non-investing women thought their future would look better if they did invest. Now you know women are better investors, so is it time to get investing?
Yes, women should start investing
So you heard it right - women make excellent investors. They tend to be more thorough in their research, analyze investments carefully, and focus on long-term goals rather than short-term gains. Women are also more risk averse and less likely to act on impulse when it comes to investing decisions. This allows women to think strategically and make smart investments that can potentially yield great returns over the longer term.
Through modern technology, women investors have access to the same information as any other investor, giving them the opportunity to stay informed and up-to-date on their portfolios. Women who take advantage of these tools and resources can become very successful in investing – making them some of the most shrewd investors there are!
Claim your financial power
It's time women take their financial destiny into their own hands and start investing. Women have been proven to be stronger, more informed investors, who can often beat the markets due to their patience and understanding of finances. Nowadays there are tons of resources available for women to learn how to become successful investors and diversify their portfolio in a way that works best for them. Investing can be especially beneficial for women, who, historically speaking, tend to live longer than men and need an extra savings cushion later in life.
Taking part in investing means women are one step closer towards achieving financial freedom and security. All women should embrace the power of investment-- it's time to make your money work for you. It’s an opportunity that shouldn’t be missed.