Men are from Mars, women are from Venus, but we all invest on earth. Gone are the days when men controlled the finance and women raised the children. Nowadays both genders have equal say in major household decisions, including money and investing. However, there is still a large degree of parity in the investment styles of men and women. This stems from the inborn tendencies and cultural expectations surrounding gender and money. Many of the fundamental stereotypes we try to abandon, show up in the ways the sexes approach investing. While modern research suggests women are better investors, the ultimate investment strategy strikes a balance between men and women approaches.
Investment Horizon
By nature, women tend to focus on the future and what’s down the road; whether that’s in relationships or savings. Research has even shown that females tend to behave in a way that better suits long term investing. This consists of choosing a thought out investment strategy and sticking to it, even through its ups and downs. Their male counterparts, on the other hand, are more likely to track short term fluctuations and abandon ship at the slightest sign of market volatility. This occurs throughout all types of investing, even retirement accounts which typically have multiple decades to compound. It is estimated that the men tinker with their portfolio 50% more than women. Generally speaking, women are more patient and allow their investments to grow. This is important because frequently trading and acting on short term fluctuations tend to end with negative outcomes. In this regard, men could borrow a page from women on patience. Risk Tolerance Choosing an investment horizon and being patient is only step one. Determining what assets to buy can also …show more content…
Even before investing a dime into the market, you must understand your current and future financial situation. Financial planning is often very subjective and can vary from person to person and even between genders. In the long run, women tend to save more than men, whether that’s a savings account or long term investment like a child’s education or retirement. One common theory to women’s conservative approach comes from the gender wage gap. Since women earn less than their counterparts, they have more to lose by taking risks and playing the markets. Another theory suggests that it is biological and maternal instincts play a role. Either way, research has found that women save 8.3% of their salaries while men only save …show more content…
Even though financial services are dominated by men, women have the edge over the long term. A passive, more conservative strategy conducted by females has been found to generate median returns of 4.7%, while males earn just above 4%. Modern research has found over a long investment horizon a passive investment strategy of index funds will out perform a more active one with frequent trades. So it makes sense that men are 25% more likely to lose money on the market. However, since women tend to be risk averse, potential returns are often higher for men. Furthermore, men and women tend to gravitate towards certain stocks. Men are more inclined to invest in Tesla and Coca-Cola while women choose Pfizer and Whole Foods. Despite what the numbers may say, both men and women can take some pointers from the opposite gender when it comes to
Investment Horizon
By nature, women tend to focus on the future and what’s down the road; whether that’s in relationships or savings. Research has even shown that females tend to behave in a way that better suits long term investing. This consists of choosing a thought out investment strategy and sticking to it, even through its ups and downs. Their male counterparts, on the other hand, are more likely to track short term fluctuations and abandon ship at the slightest sign of market volatility. This occurs throughout all types of investing, even retirement accounts which typically have multiple decades to compound. It is estimated that the men tinker with their portfolio 50% more than women. Generally speaking, women are more patient and allow their investments to grow. This is important because frequently trading and acting on short term fluctuations tend to end with negative outcomes. In this regard, men could borrow a page from women on patience. Risk Tolerance Choosing an investment horizon and being patient is only step one. Determining what assets to buy can also …show more content…
Even before investing a dime into the market, you must understand your current and future financial situation. Financial planning is often very subjective and can vary from person to person and even between genders. In the long run, women tend to save more than men, whether that’s a savings account or long term investment like a child’s education or retirement. One common theory to women’s conservative approach comes from the gender wage gap. Since women earn less than their counterparts, they have more to lose by taking risks and playing the markets. Another theory suggests that it is biological and maternal instincts play a role. Either way, research has found that women save 8.3% of their salaries while men only save …show more content…
Even though financial services are dominated by men, women have the edge over the long term. A passive, more conservative strategy conducted by females has been found to generate median returns of 4.7%, while males earn just above 4%. Modern research has found over a long investment horizon a passive investment strategy of index funds will out perform a more active one with frequent trades. So it makes sense that men are 25% more likely to lose money on the market. However, since women tend to be risk averse, potential returns are often higher for men. Furthermore, men and women tend to gravitate towards certain stocks. Men are more inclined to invest in Tesla and Coca-Cola while women choose Pfizer and Whole Foods. Despite what the numbers may say, both men and women can take some pointers from the opposite gender when it comes to