This month we celebrated International Women's Day with a look into female investing data. You might be surprised by the findings...
The next time a finance bro tries to give you investment advice, you might want to stop him and ask a finance gal for advice instead.
Jokes aside, the debate around gender and investment success has been going on for decades. But here’s the thing: there’s a growing body of research that suggests women tend to display certain traits and behaviours which can lead to higher investment returns.
Don’t believe us? Here’s what the data shows:
When it comes to stock market investing, the greatest pitfall of many investors is reportedly, ‘overconfidence and overactivity’. This popular investment study reveals “trading reduces men’s net returns by 2.65 percentage points a year…[and] 1.72 percentage points for women”.
Regardless of gender, trading more is correlated with lower returns. However, studies have shown that women were less likely to rate themselves as “very knowledgeable” about investing, and therefore, less likely to engage in excessive trading.
As the saying goes, it’s often about “time in the market” as opposed to “timing the market” so less active investing can have its benefits.
This tendency to make more rational investment decisions, and hold tight even during stock market turbulence has historically served women (and their portfolios) very well.
So if you need a lesson on self awareness and emotional regulation, a female investor may be able to show you how it's done!
A UNSW study, tracking investment returns by both men and women over a 17 year period has revealed that “women…tend to identify mispricing opportunities…more acutely than men”, which basically means that women tend to be better at sensing when a stock was undervalued (potentially good time to buy) or overvalued (potentially good time to sell).
The study also suggests this investment knack may be due to biological factors. Research has shown that men and women utilise different areas of their brain when making decisions, and pattern recognition can potentially allow “females to enjoy greater trading intuition”.
So the next time you, or a finance gal you know, gets the feminine urge to invest…they might be onto something.
Despite massive progress and more women investing than ever before, many women still lack confidence when it comes to investing. In fact, women are almost twice as likely to describe their level of investing knowledge as “non-existent” compared to men.
We want to give a massive shout out to all the fabulous women part of our Flux community who are taking steps to stay financially educated. You make up 42% of our readers and listeners and we love to see this number growing every year! 🥰
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