5 Reasons Why Women Should Be Running The Investments In The House
December 19, 2012
Though men everywhere refuse to believe it, studies have shown that women make better investors than men. Whether investing family funds or doing it professionally, women continually squeeze more money from the Wall Street vine than men. The question is … what makes women better investors?
1. Women Have Less Ego
Men see wealth as a way to get richer; women see it as a means of security. They realize the money they make goes to support their families, and this makes them less likely to take unnecessary or dangerous risks with their investments. Men tend to have their eye on “more” wealth, while women want “enough” wealth to bring them security. As a result, women do not make decisions based on gaining the competitive edge, but rather based on what will guarantee the most security.
2. Women Are Patient
For years, it was believed emotions had no place in the making of financial decisions. Studies now are proving this to not be the case. The fact that women are more in touch with their emotions than men is helping their portfolios. Since they understand and actually know what they are feeling more often than men, women are better able to separate their emotions from their decision making and thus make decisions based on other factors. If an investment is doing poorly, they may feel fear, but they understand it is only a feeling and can look at the data to determine whether to ride it out or sell if it’s warranted.
3. Women Are Not Overconfident
Men tend to move in and out of the markets at a “hyper” rate. This can be attributed to their “overconfidence,” brought about by an overestimation of their precise knowledge and abilities. It leads to a masking of failures and the inability or reluctance to take responsibility for mistakes. Men are more likely to blame the markets or factors beyond their control for bad decisions, while women are willing to face their failures and learn from their mistakes.
The “under-confidence” demonstrated by most female investors results in the exercise of caution, self control, and discipline in making trading decisions. Under-confidence in women leads them to have a formal investment strategy and compels the discipline to stick with it.
4. Women Exert More Self-Control and Discipline
When under stress, women are more likely to exercise self-control and discipline than men. This accounts for the reason why, in periods of market declines, studies have shown that men are more likely to trade out of their stocks (49%), while women will refrain from doing so until after they have further assessed the situation. Over the long term, staying patient and disciplined to a sound investment policy is a key investment practice to follow.
5. Women Know When to Ask for Directions
We all know that women are not shy about asking for directions on the road. That same inclination is found in their willingness to turn to financial advisors for help, both in planning their investment strategy and for guidance in making difficult investment decisions. 82% of high net-worth women report seeking professional financial advice, compared with only 53% of men. Women know when they need help and are not afraid to ask for it.
You Have the Tools…
Since you are already equipped with the tools … Go use them! Remember you do not need to be fluent in the language of finance. Investing is like medicine. You should hire experts to help you, but it is important to be educated on the decisions you are making.
