Why Do Women Actually Get Better Investment Returns Than Men

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Research has shown that women actually get better investment returns than men on average.

On this day, I thought I should share some information and shed some light on the myth that women aren’t good investors. As it turns out, research has clearly demonstrated that women investors have a slight edge over men when it comes to investing. Women’s investment returns tend to be better than those of men on average.

A few reasons can be attributed to this phenomenon. Why do women actually get better investment returns than men? Here are a few reasons why.

Women Tend to Trade Less

Women do not trade as often as men do and this allows them to ride out market swings and avoid extra fees. They also tend to invest more consistently, which means they are not trying to time the market.

Women Are Less Impulsive

Women don’t tend to react to market fluctuations the same way as men do. They also, do not get swept away by the market noise or obsessively check their investment portfolios several times a week as men do. As such, women who are able to maintain a sober mind over their investment decisions are less likely to change their asset allocation.

Women Tend to be Less ‘Confident’

Despite their better performance, they are still less confident than men when it comes to making investment decisions. They doubt their abilities and feel like they need to learn more to make sound investment decisions, whereas men are more comfortable and jump right into the market.

Though this may seem like a negative, it’s actually a plus. Our conservative nature makes us more detail-oriented, risk-aware and invests for the long haul. A good investor tends to turn to professionals when uncertain about a certain financial decision – it is good practice.

Women Tend to Stay Engaged & Informed

Women tend to talk about money and investing with their friends and consult widely. This allows them to boost their confidence when making financial decisions. Additionally, friends also serve as a support system when things get tough. They offer support when it’s time to make changes to our portfolios or goals and keep us on track throughout our investing journey.

Investing can be quite an emotional affair and we all need someone who understands our journey to lean on and support us when things get tough.

Women Tend to be Cost-Focused

Successful investors are cost-focused. And women, out of habit are always carefully looking at prices more than men. As such, when investing, women tend to not only look at returns but they are also looking for low-cost funds or ways to save on fees and taxes.

Women Are More Disciplined Savers

Despite earning less than men on average, women tend to have a higher savings rate than men. Although a higher savings rate doesn’t necessarily mean that they have higher savings balances women however consistently save and recognize the importance of having emergency savings. By doing so, they have adequate cash reserves that make it possible for them to avoid having to liquidate investments in a pinch – and keep gains locked in.

Women Tend to Invest Early

Women tend to start investing early and invest for the long haul. Starting early typically allows investors to take more risks and have an opportunity to earn better returns. With early investing, it becomes easier to recover from wrong decisions without affecting the long-term financial goals. 

Summary

As we continue to seek out different ways to improve our financial self, remember to tap into those unique qualities – habits and skills – that you’re already made a part of your everyday life. Because, as it turns out, we are model investors that get better investment returns on average. So let’s continue to:

  • Invest with a higher purpose
  • Have an objective view of our investing abilities
  • Are risk-aware and avoid impulsive decisions
  • Are cost conscious
  • Stay on target to meet long-term goals

Image credits: Top by Cleyder Duque from Pexels

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Irene Makanga
Irene has an MBA in Finance and is an avid businesswoman, passionate about financial literacy.

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