Research shows women make better long-term investments than men, here is why
Research shows women make better long-term investments than men, here is why
When it comes to money and finance, women have been subjected to the most stereotypical treatment. From the widespread belief that women are more frugal and incapable of earning money to the charge that they make poor investment choices, the list is quite extensive.
Recent research, however, has cast serious doubt on the latter allegation. According to Forbes, the University of California, and Hargreaves Lansdown, a British financial services provider, women are actually better investors and are more likely to generate higher returns on their investments over time than men.
On average, women earn at least 25% more than men on their investments. For example, the average return on stocks is 7%. However, that figure is primarily for men, as research indicates that women are more likely to earn 7.8 percent on the same investment.
While this may not seem significant in the short term, women would earn significantly more money than men in the long run. Daniella Peri, founder of the women's welfare organization Yoppie, puts it this way:
“If the average male and female investor are given £10,000, a 7% increase for the average male results in a first-year return of £10,700. However, this return would be £10,780 for the average female investor.”
“Not a huge difference, but when viewed over a 30-year period, the difference becomes much more significant, with the average female investor earning £95,184, 25% more than the average male investor earning £76,123,” she concludes.
Therefore, men, do not be surprised if your wife, sister, or even mother has more disposable income. She almost certainly earned it through some extremely prudent investment.
However, why is this the case? What factors contribute to women being better investors? The reasons are not implausible, as they are the same reasons we have always believed women make poor investors in the first place.
Planning
You believed that women were not equipped to handle rigorous financial planning, didn't you? While women generally lack that kind of flair, they do plan very differently than men do.
While male investors are more likely to focus on investment performance and make decisions based on it, female investors create financial plans and invest with their family in mind. As a result, their focus is naturally on the long term.
Low penchant for risk-taking
I'm sure we've all heard the adage: the greater the risk, the greater the reward. To that end, I'd like to inform you that women are largely unconcerned with all of that. While investing is all about taking risks and bearing the consequences, women want to be as risk-averse as possible.
As a result, women prefer to invest in diversified portfolios over high-risk investments.
Thus, while men are more likely to seek out high-risk, high-reward opportunities that require them to punch well above their weight class, women are more likely to play it safe and simple. They are proceeding at their own pace, which is paying dividends.
Patience
Patience is not a male attribute. On the other hand, men are generally delighted with instant results. While this qualifies them as excellent impact investors in short-term instruments such as forex and cryptos, it qualifies them as poor long-term investors in instruments such as stocks and bonds.
Women invest with significantly more patience than men, and research indicates that men are 35% more likely to make trades. However, for female investors, this patience often pays off in the long run, providing a more consistent rate of return.
The patient dog is rewarded with the finest bone. The patient lady receives the largest check. There are no caps.
Research and Guidance
You believe that women seeking assistance and guidance, particularly in areas such as investments, demonstrate that they lack knowledge in these areas, don't you? While that may be true, by the time they are finished running around, they will have gathered as much information as possible from a variety of sources to assist them in making more rational investment decisions.
If that does not work, they are more likely to conduct research or seek professional assistance.
A female investor is likely to have the combined experiences of the ten men with whom he spoke. If she does not, she has almost certainly sought and obtained professional assistance. As such, she is approaching that investment with as much insight as possible.
Finally, while it is widely accepted that men are more aggressive when it comes to investment and financial matters, and that men are more dominant in that space, this research demonstrates that average women possess characteristics that enable them to cash out their investments more quickly than average men in the long run.
That is not to say that men invest incorrectly. Not at all. While men have the ideal approach to investments focused on immediate returns, women's approaches are generally more long-term oriented.
As Daniella Peri puts it, "there is no one-size-fits-all approach to investing," but a number of studies have found that many of the traits and approaches demonstrated by women pay off in the long run.
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