The Difference Between Men and Women When It Comes To Investing
Securing wealth has typically been associated mostly to men. There’s been an irrational assumption that because men dominated the industry of business and finance for so long that it was due to some inherent male trait or behaviors that women simply lacked. Turns out this is not only false, but there is substantial evidence that the reverse is often true:
Women make better investors than men.
1. Women approach investing with a different mindset
Women approach investing with an entirely different mindset than men. According to BlackRock investment strategist Nelli Oster, women tend to view investing with a longer-term, non-monetary mindset that balances independence, financial security, and quality of life.
He also noticed that women take more time in researching their investments, and perhaps most importantly, garner advice before committing to investments in their portfolios. This is in stark contrast to men who prefer independent decision making that tends to be more impulsive in response to market trends.
Lastly, Oster notes that women utilize professional financial advice more, spend more time with their advisers, and maintain longer relationships with these mentors.
2. Women make fewer emotionally driven investments
Another key differentiator that is usually thrown out as derogatory, or at least as a compromising trait, is the emotional difference between men and women. Denise Shull explores emotionality in her book, Market Mind Games: A Radical Psychology of Investing, Trading and Risk. In it, she discusses the actuality of investing and trading based on emotions.
Many people are unaware of how panic, fear, and anxiety can influence trades or investment to offset or enhance those emotions. Women are more aware than men that emotions influence perception and are especially more aware of their own emotional state.
And since women are generally more aware of their current emotional state, they are better at refraining from making important decisions during those times. Shull explains that this also leads to women seeking to make investments less for the need to gain control in other areas of their life and more for securing their future.
3. Women Invest To Win
Another aspect of difference theory that women come out on top of is the need to win. Deborah Tannen, who really put difference theory in the spotlight, says that women see the world as a network of connections while men tend to see the world as a competitive place. This makes men much more likely to make decisions motivated by the need to beat a competitor. This type of behavior disregards risk, something women are far less likely to do.
All of this isn’t to say that all women are like this or that all men aren’t as well. These are of course, generalities. But they are things to consider when we think how women are changing the landscape of managing their finances and investments, for the better. These generalities offer insights to how men can learn from women and evolve alongside them. Because of our differences, we become better as a whole when we look out how women have changed the way we’ve traditionally thought about building wealth.