Are women better investors than men? The answer is a resounding yes.
It comes as no surprise that men dominate the financial trading and investment industries. However, a 2021 study found that on average, female investors outperformed their male counterparts by 40 basis points or 0.4%.
Let us unpack the reasons for that – and why we think women are not just better investors in terms of performance, but also their positive impact on the world.
1. Women take time to research their investments
Women investors spend more time researching their investment decisions, according to studies.
It’s true that women take on fewer risks than men when it comes to investing, but that doesn’t mean they’re risk-averse. Instead, they simply invest at appropriate levels of risk more often than men. The result is better investing outcomes.
A survey has found that 51% of female investors said their goal was “capital preservation” compared with only 32% of male investors who said so.
2. Women are less likely to borrow money
When it comes to investing, the gender pay gap means that women typically have less money to invest. But they are also less likely to borrow money – and that’s a very good thing.
According to the World Bank, women are 16% less likely than men to borrow for a wedding, health expenses or home construction. The fact that men tend to take out loans to finance their investments makes them more vulnerable to market volatility. A market crash can leave them with nothing.
Personal finance experts like to say that savings are initially a much bigger component of a beginner’s investment portfolio than returns. This also helps women level the playing field in the early stages when they’ve only just started investing.
3. Women are the better long-term investors
In contrast to gender stereotypes, women are less emotional investors and tend to stick with their investment plans even when stock markets go up and down, while men trade more often.
It has been shown a number of times that most investors who try to time the market and outsmart it will underperform and lose money when compared to simply holding on to their investments. The “buy and hold” approach will work best for most investors - and women follow it instinctively.
A 2017 survey showed that just 9 per cent of women thought that they would outperform men as investors. Paradoxically, this lack of (over)confidence could also be a reason that makes them better investors.
4. They’re more likely to trust a professional
According to Fidelity’s 2021 Women and Investing Study, 86% of women agree that having professionals manage their investments makes life less stressful.
Furthermore, women tend to be more open to receiving financial advice after establishing a positive relationship with an advisor. The financial advisors they value are those who assist them in learning and who create a safe space for them.
According to 69% of women, “communicating in a way that I understand” is the most important quality of an ideal financial advisor.
Therefore, it’s also easy to understand why female investor communities, sometimes organized around Instagram influencers or bloggers, are growing increasingly popular.
5. Female investors are more likely to invest according to their values
One thing that most theories and studies agree on is that women invest in line with their values.
According to the Center for Talent Innovation, 88% of women are eager to invest in organizations that promote social wellbeing. In other words, 9 out of 10 women would consider sustainable investing in their portfolio!
Given that sustainable investing is one of the most powerful ways individuals can impact the world around them, women have an enormous opportunity to shape the world to be a better place for the next generations.
Start your sustainable investment with Grünfin. We help you invest your money where your values are.