Who are better investors men or women? I was talking to a business owner in my office building last week and he asked me this question, “Who are better investors men or women?” He was shocked when I gave him an immediate response. He then stated, “You did not even have to think about it”.
The answer to the question is one that has been written about many times. I think part of my colleague’s amazement was not in the speed in which I responded, but with the answer itself. The response of women is often a surprise to men. Studies have shown the reason women are better investors has more to do with the how:
• How they trade
• How they select investment vehicles
• How they get their information
How they trade:
In general, men are more active traders than women are. Back in 2008 and 2009 the Vanguard Group, found that men were more likely than women to sell their shares when the market was melting down. The author of this study, John Ameriks, said men tend to think they know what they are doing even when they do not know. When men think they know, they have the tendency to make trades thinking they are improving their position, to learn later that they have not.
Stocks, ETFS, Mutual Funds:
According to Mintel Group and Brinker Capital, men tend to invest in stocks, ETFs (Exchanged Traded Funds), futures and options. On the other hand, women invest in mutual funds. I think the reason for this is the thrills of being able say you are playing the market. When men are around the water cooler, they want to state the company they are invested in. It is more exciting to say I am in Apple or Google instead of saying I am investing in an S&P 500 Index fund.
Asking for Directions:
As men, we all have heard the stereotype of never wanting to stop the car and ask for directions. Well, it looks like we are stuck with the same stereotype again. According to LearnVest.com 87% of women would like to work with an advisor. Men like to think they can figure it out on their own. They like to do this by taking in the infotainment (this is information delivered as entertainment) available to them through TV, blogs and magazines.
The picture is not all rosy for women investors. I heard a speech last week and the speaker Hilda Pinnix-Ragland from Duke Energy was talking about the financial gap between men and women. In fact, the average net worth of a single white female age 36 – 49 is $42,600 (which is only 61% of her male counterpart). The jaw-dropping statistic mentioned by Mrs. Pinnix-Ragland was that the African-American female average net worth for this age group was just $5.
As you can see, both men and women have a lot to learn from each other when it comes to investing.
What can you do better to improve your net worth?
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Author
Isaac is a Fee-Only (no products sold) Certified Financial Planner® Practitioner. Isaac founded Stalwart Financial Planning with offices in Fayetteville NC and Durham NC. Isaac provides comprehensive planning and investment management services to individuals from all walks of life. Isaac can be reached by phone at 910-867-8464, or by email (iallen@StalwartPlanning.com). Visit him at Stawart Financial Planning www.StalwartPlanning.com.