How Men and Women Differ in Their Approach to Investing

There is a common misconception that men are savvier investors than women. Much of this stems from societal conditioning, as many people grew up in homes where the man of the house managed the money. However, as more and more women are putting themselves in the financial driver’s seat of their lives — either by choice or by chance — this sentiment continues, even among women who are saving and investing successfully.

The belief that men are better investors is not only concerning, it is also untrue. While women still face unequal pay in the workplace, when it comes to investing, studies have found that women are actually outperforming men by saving more and generating a greater return on their investment portfolio.

How Men Tend to Approach Investing

It’s no secret of history that men founded the financial markets and have handled investments for generations, so you might be wondering how women have made such swift progress recently. We can start by considering the way things have always been done to understand the traditional approach to investing, and then compare it to how women tend to invest.

In short, men generally watch the market, chase performance, and make investment decisions based on benchmarks. This is partly due to the way the financial industry works, promoting products based on performance during a specific period of time. Men want to know what’s hot and they want in on it, because they want to win.

Men have developed an approach to investing based on what they’ve been advised and it has worked well, but have women secretly discovered a better way to invest?

How Women Tend to Approach Investing Differently

Without aiming to outperform men and without even realizing it was even happening, women investors are winning and it could be due to characteristics that some consider inherently female.

In short, women investors tend to be more patient, prudent, and plan with a purpose in mind. Their approach to investing has less to do with what’s performing well right now and more to do with what their long-term goals are, personally and for their families. They take a holistic approach to allocating and diversifying, with a focus on staying on track and making age-appropriate decisions.

You may have heard that women investors are more risk-averse than men, but they actually tend to be more risk-aware and act accordingly. Staying on track is what matters most to them, so if taking a risk is likely to help them achieve a goal, they’ll do it.

Plus, while men are busy buying and selling, women are watching and waiting. In 2016, Fidelity found that men made 55 percent more trades than women on average. And though their lack of responsiveness to market fluctuations might make them seem less active, this behavior is more likely due to their savvy conservative approach.

The result, on average, women’s investment portfolio’s outperform men’s.   Women win by focusing on investing for what matters, avoiding rash decisions that can lead to negative outcomes, and creating the peace of mind that comes from knowing what it is they are investing and saving for and tracking to that goal.

 

 

 

 

 

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