While recently participating in a professional education conference, I attended a session on the subject of women and investing.
Going into it, I expected a discussion around communication styles or financial planning needs that might be unique concerning female clients. However, I quickly realized that the speaker’s topic was actually around the research showing that women, as a group, often make better long term investment decisions than their male counterparts.
Here are just a few characteristics that distinguish women and men investors, and seem to indicate that “investing like a girl” is a good thing!
- Women spend more time researching their investment choices and tend to own what they know. This reduces the activity of chasing “hot” tips and trading on whims.
- One study found that men trade 45 percent more often than women do. By trading more often, men reduce their net returns and increase transaction costs and capital gains taxes.
- Men are more confident investors, however they are also more susceptible to becoming overconfident.
- Women tend to ignore market noise and aren’t as susceptible to peer pressure as men are, which results in a more patient, long-term approach to investing.
- Testosterone impacts investing behavior. Science points to the possibility that testosterone is responsible for herdlike risk-taking behavior from men in the financial markets.