Women & Money: Why women make better investors than men

Recently, Bollywood actress Richa Chadha shared how her mutual fund investments helped fund her wedding. When she faced “cash flow issues” while planning her dream wedding with actor Ali Fazal, her own personal investments helped cover part of the expenses.

“Don’t put the burden on your father or your mother for your marriage, start investing,” is Richa’s advice to women to explore investment options for themselves. This got me thinking about the relationship that Indian women, or women globally, share regarding money and investments.  

Statistically speaking, women are better than men when it comes to investing. Usually, people believe that men are better investors than women. But studies say otherwise. In 2018, a study by the Warwick Business School concluded that women outperform men by 1.8% when it comes to investment performance. Women align with outcome-based investing, the study found. In a Survey by FinEdge in 2023, women save 5% more every month for their future goals than men.

So being aware of the importance of investing and possessing the right investing skills is the key, be it homemaker, professional, or entrepreneur. However, people have different views on the narrative of women investors. Because society’s mind is still ruled by the stereotypical belief that men do the investing and women have no idea about stock markets and SIPs, etc. In addition, people perceive that women mainly depend on their husbands or fathers when it comes to the financial planning spectrum. Despite all these perceptions, women are certainly winning at the investment game.  

If you still have doubts, here are some reasons why women make better investors than men.

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Women trade less frequently

Firstly, women are patient when it comes to making investments. According to the study, women trade 27% less frequently than men. Also, the investing confidence of men can induce more frequent trading. There is a negative relation between returns and frequent trading. On the other hand, women’s willingness to stick to investment and lower trading activity benefitted female investors.

In parallel, men tend to hop in and out of the position could indicate them being overconfident in their skills to trade and time the market. Overconfidence leads them to believe that they know more than they actually do and indulge in more frequent trading. Consequently, frequent trading costs more and dampens returns.

Women investors are more conscious of risk

Women choose the stock market wisely because they are more risk-conscious. They often prefer a slow and steady risk-averse approach to investing rather than selecting the riskier lottery-style investment option that men often prefer. In lottery-style investment, men tend to invest in more risky, lower-priced shares that might increase in value sustainability and wish to keep shares that show a loss while selling off their winners.

According to a survey by BlackRock, investor pulse shows that 72% of women rejected riskier equities, bonds, or real estate as opposed to 59% of men. Risk consciousness is the biggest factor to consider while investing and one of the reasons that hold many back from investing.

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Women put in time in research

Women tend to spend a lot of time researching and learning about investing. Feeling more insecure about investing benefits women who invest. Consequently, they often make smarter decisions that give them greater returns.

Generally, female investors are more inclined towards long-term investing and understand market volatility. As a result, they are less eager to attempt to beat the stock market. Women tend to spend time fully understanding what they are investing in. It is part of their risk management skills. Knowing everything before pulling out the trigger is better to lower the risk.

Women assign their portfolios more adequately and aim for long-term results

Men tend to overweight their portfolios towards greater stock allocation. On the other hand, women build a more balanced and diversified portfolio. According to a survey, women are opting for instruments such as systematic investment plans (SIPs) and strongly emphasize prioritizing retirement. Almost 40% prioritize retirement planning, while 35% allocate funds specifically for their children’s education.

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Women are more consistent and systematic

When it comes to investment, women are more consistent than men. They are more persistent in applying themselves and taking action. Women are more patient, and their decisions are based on long-term investment. For women, it is not about a quick win; it is about making sure that they have applied their knowledge and searched appropriately. It is important to acknowledge all these strengths and work to develop them further.

Women invest an average of Rs. 14,347 monthly, slightly higher than men at Rs 13,704, challenging traditional assumptions. So ladies, what are you waiting for? Take a hint from this and start your journey towards financial knowledge and independence now, because you inherently know how to do it better!

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