Are Women Better Investors Than Men?

The Answer? Gender Doesn't Matter. It's All About Getting The Fundamentals Right

Illuminated light bulb between rows of men and women in profile
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It’s the age-old financial “battle of the sexes” question.  Who are the better investors- men or women?  No doubt many of us have bantered this question about with friends and colleagues, and perhaps it’s even sparked a heated debate or two in your own home.   

There have been a significant number of articles and studies published that delve deep into this subject in search of the answer.  Here's what's most interesting.

 A number of reports tell us that men are predominately in the driver’s seat when it comes to making investment decisions for their household.  For example, a CNN Money article entitled Rich men still control household investment decisions cites a survey conducted by U.S. Trust, Bank of America’s private wealth division.  The survey of some 650 adults with $3 million or more in investable assets showed that “Nearly three- quarters of wealthy men say they are better qualified to make investment decisions than their spouse.  That compares with a mere 18% of wealthy women who believe they could do a better job.”

But here's the flip side.  While it may be that men believe that they're more qualified to make investment decisions, the overwhelming majority of research published tells us that women are actually the better investors.  One such study was cited in the USA Today article, Women are mostly better investors than men.

 LPL Financial conducted a national survey which showed that women tend to make better investors because they research investments in depth before making portfolio decisions and they are more patient, whereas men are more prone to market impulses.  In this same article, Nelli Oster, director and investment strategist at Blackrock, says that "women tend to focus on longer-term, non-monetary goals.

  Instead of merely viewing money as a means to purchase something, they consider money to represent independence and security."  Oster also notes that women are more likely ask for direction on investments whereas men are more likely to make decisions on their own without seeking professional advice or guidance.    

Personally, I have seen a lot of what the studies suggest play out in the real world.  Women are generally looking for long term security and want to protect what they have.  They are a little more aware their feelings and fears about what’s happening in the market which gives them pause before making a rash or quick decision that could cost them dearly at some point down the road.  Men, on the other hand, are for the most part focused on increasing returns.  Inherently, men are bigger risk takers, which isn't a bad thing, but it can cause significant pain on the downside.    

However, with that said, if you were to ask me point blank who the better investor is, my answer is that it depends on the “market” and this is something that investors themselves can’t control.  Over the long run, the one who wins doesn’t have anything to do with gender.  The investor that wins is the one who can be aware of and control their emotions.

  The reality is that investing is simple, it’s just not easy.  The real key to success isn’t about finding the right stock or hitting the lottery.  It’s about getting the fundamentals right from the start. 

Four Fundamentals of Investing 

Balance Is Always Your Friend.  It’s important to allocate your assets in a combination of investment buckets.  These buckets represent cash, income (bonds), growth (stocks), and alternatives (investments that don’t neatly fit into the stock or bond bucket) like MLP stocks, Energy Royalty Trust stocks, gold-related investments, and preferred stocks.

Target Your Actual Goals.  The only thing that actually matters in investment planning is your own personal goals and targets.  For example, if you need $3000 a month in retirement on top of social security, then know that you need close to $750,000 in savings to comfortably do the trick.

Keep Your Costs Low.  ETFs are now a lower priced option to own a basket of between 30 to 3000 stocks.  Pricing typically at one-quarter of a percent a year vs. a full percent a year (plus) for actively managed mutual funds will make a big difference over time.

Patience.  Very few people ever get rich overnight.  Most wealthy people have gotten rich slowly, methodically, and with hard work.  This is a formula that still works to this day.   

Conclusion

This debate is going to rage on for years to come.  At the end of the day, gender doesn't really make a difference.  The best investors will be the ones who get the fundamentals down from the start.  

Disclosure:  This information is provided to you as a resource for informational purposes only.  It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors.  Past performance is not indicative of future results.  Investing involves risk including the possible loss of principal.  This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions. 

Wes Moss is the Chief Investment Strategist at the financial planning firms Capital Investment Advisors and Wela. He is also the host of the Money Matters radio show on WSB Radio, and a host of the TV show Atlanta Tech Edge on Atlanta’s NBC affiliate. In 2014, he was named one of America’s top 1,200 financial advisors by Barron’s Magazine. He is the author of several books including his most recent, You Can Retire Sooner Than You Think  - The 5 Money Secrets of the Happiest Retirees, which has been one of Amazon’s best-selling retirement books in 2014.