A Wells Fargo Investment Institute study found that women perform better than men as investors. We can probably blame testosterone, which makes men quicker to make judgments and less likely to examine facts that might prove them wrong.
So what can you do if you don’t happen to be a woman? Try to emulate the traits that give them the advantage:
1. Women are more patient
Since they tend to trade less frequently than men, they often earn higher returns for the risks they do decide to take. Men on the other hand tend to be overconfident about their investment ability. Additionally, their frequent trading carries both direct and indirect costs, which can eat away at returns. (See also: Leaving your 401k the heck alone)
2. Women are more disciplined
Women tend to stick to their investment plan, which can to lead to better results. However, male investors were six times more likely to make major changes in asset allocation, such as switching from 100 percent stocks to 100 percent bonds, or vice versa.
3. Women are more willing to learn
They are more likely to seek education and advice from investment professionals. Also, twice as many women as men said that what they need most from a financial advisor is education about investing principles and concepts.
Room for improvement
The one area where women lag behind is investing confidence. While this might help them make prudent decisions, it also dampens their chances at higher returns in some cases. Become a more confident investor with these tips:
Visit investment websites, take an investment class, or meet with an investment professional. Learn what your employer offers. Explore individual retirement accounts, or, if applicable, your partner’s retirement benefits.
Create a budget for saving and investing. Set goals with a time horizon and risk level you’re comfortable with.
Choose the asset allocation that works best for your personal financial situation. Regularly monitor and rebalance your portfolio as necessary.
A great place for financial advice is blooom, where members have free access to registered Financial Advisors. Send them your questions and you’re on your way to becoming the best investor you can be!
Published on March 6, 2018