Women as Investors

I’ve been reading results of national surveys that indicate women tend to be the primary financial decision-maker in households where that power is not equally shared between husband and wife.  Still, I find it hard to believe that women, in general, take much interest in investing, retirement planning, and the stock market.  I see their involvement in household financial affairs as more geared to deciding what model of family car to buy, when to replace the refrigerator—mundane stuff the guys may be only too glad to hand off to them.

 

I say this not as an expression of gender stereotyping but as an observation from personal experience, and not just within my immediate family.  Yes, I take an interest in personal financial planning and all that comes with it, including investing in the stock market; and my wife does not.  But beyond the doors of my own home, I find one nearly invariable indicator that this is true for most other couples, too:  I just don’t hear women broach the subject or talk much about it at all.  And if they don’t want to talk about it, then they must not be interested in it, so their male partner must be taking the lead in that area of finance.

 

But it turns out that’s male-think; and the fact that women don’t talk about their investments may actually be one of the female strengths that often makes them—yes—better investors than men.

 

Several studies have shown that women tend to be more goal-oriented when it comes to investing.  While they definitely give heed to the performance of their portfolio, they do not focus on competing with anyone else or beating some benchmark.  So if you’re not competing, what’s the use of talking about how well your portfolio is performing?

 

These same studies also consistently demonstrate that men, as a group, trade investments 45% more than women.  Buying and selling stocks and other investments costs money and in the long run reduces the return on investments.  Women have been shown to earn nearly 1% more on their investments over the long term, and that is mostly attributable to their patience.  Once they make a decision to purchase a stock, mutual fund, bond, etc. they will stick with that investment through good times and bad and won’t cash it out to chase some tip or hunch on another investment. 

 

The ladies also seem less prone to panic.  I suspect this is at least in part due to their lower likelihood of getting their financial news from television.  Those finance gurus on the tube have a self-interest in taking extreme positions, whether to sell something or just boost their ratings by being out of step with everyone else, right or wrong.  And being less prone to panic during a downturn means that women not only hold on to their investments and reap the rewards of the rebound in prices later but will likely continue to buy when the market is down—meaning they can get some good bargains on quality investments that will appreciate in value over time.

 

Finally, women are more willing to ask for financial advice.  (Substitute the word “directions” for “advice” and you will see why I almost left this out because it’s so obvious.)  Professional financial advisors report that women ask more questions and generally talk through their decision-making before actually investing.

 

Patient, goal-oriented, less prone to panic, more willing to ask for advice…women are actually not bad at this investing thing.  Guys, maybe we should consult them more about our retirement accounts.  We have some strengths of our own, and together we can make an awesome investing duo.  Just don’t ask us what color car to buy, and we won’t ask you for directions when we drive it.

 

Happy Mother’s Day.

 

Until next time,

 

Roger

 

“A truly good wife is the most precious treasure a man can find!..She knows how to buy land and how to plant a vineyard, and she always works hard.  She knows when to buy or sell, and she stays busy until late at night.” Proverbs 31:10, 16-18 CEV