Why Women Make Better Investors Than Men

It’s official: When it comes to the sexes, women make better investors than men.  This is no longer a topic for debate at your next BBQ – it’s fact!

Last year, articles were widely published on the research that proved it – Fortune magazine,USA Today, Psychology Today and Fast Company were just some of the media outlets to spread the (perhaps unsurprising) news.

Men may dominate the investment fields, but more women are becoming angel investors, more women are trading on stock exchanges, and more women are saving.  They are also proving to be better at it, overall.

Terrance Odean, a University of California Professor, has studied American women’s stock picking in detail for years.  One of his studies, which took seven years, showed that women investors outperformed men by 1.4%.  In the same study, female-only investment groups were shown to have outperformed their male counterparts by 4.6%.  SigFig, an online portfolio tracker, showed that men tended to lose up to 25% more on the money market.

The reasons?

When related to the stock exchange, Odean’s study suggested that the main reason is men’s overconfidence.  Their confidence makes them trade more, and the more you trade, the more you risk losing (and upping your transaction costs).

As explained by LouAnn Lofton in her book Warren Buffet Invests Like a Girl – and Why You Should Too Men, it would seem that Men are more influenced by hormones when it comes to money decisions.  Women have less testosterone, which makes us less risk adverse when it comes to making investment decisions.  We tend to be calm, controlled, and more consistent decision-makers. 

Women have long been the target audience for marketing and advertising messages.  This can be a drag, but what it has meant is that we’re fine-tuned to the mechanics of these messages, and can more easily filter out hype from fact.  In other words, women are more inclined to see through the puffery and find the sound way to invest our money.

Women are also more likely to approach others for advice, rather than adopt a “lone ranger” mentality.  Listening to sound advice is key to making positive investments.

If you’re interested in testing the waters, or want to learn more about investment property specifically (grow your family wealth one property at a time) get in touch with Jason from Lyfe Property here.