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Why Women Are Better Investors Than Men - Investment - Nairaland

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Why Women Are Better Investors Than Men by honoure(m): 10:45pm On Feb 20, 2015
It's no secret that the finance and investing industries are dominated by men. The 2013 Catalyst Census study, for example, found that within Fortune 500 companies, women represented only 11.4% of CFOs and 17.6% of executive level officers in finance and insurance.
But that doesn't mean women are less successful investors. To the contrary: Some traits found more commonly in male investors, such as overconfidence, are associated with poor investment decisions and lower returns, according to a Barclays Wealth Insights study of high net-worth individuals. Furthermore, the report suggested five key ways in which women might actually have an edge.
1. Women Trade Less Frequently

Men traded more frequently, perhaps as a risk aversion strategy. Greater trading frequency leads to higher commissions and fees, which can erode returns and potentially undermine an investment strategy. Women are more likely to stay the course long-term.

2. Women Are Inclined to Use Proven Financial Strategies

When faced with tough financial decisions, "failures of rationality" make it difficult to stick to proven financial strategies, resulting in missed opportunities, short-term financial decision horizons, buying high and selling low, and action bias (trading too often). Women were more likely to use proven financial strategies and avoid these mistakes.
3. Women Choose Lower Risk Investments

The study found that men were more likely to consider themselves financial risk takers and were more willing to choose high-risk investments in order to achieve higher returns, even when sticking to financial principles would have achieved higher gains. Women pursued a steadier course and had more stable returns.
4. Women Have a Greater Desire for Self-Control

Of the subjects studied, it was concluded that using tested investment strategies was linked to increased financial satisfaction and greater wealth. Women comprised a higher percentage of those individuals possessing a high degree of financial discipline.
5. Women Don't Try to Time the Market

Women were said to more commonly use self-control strategies — a trait that makes them less likely to react in haste to market swings. Men tried to time the market more often, exposing them to greater risk and return variability.

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