It can be challenging to find your own personal investment strategy, which includes deciding how comfortable you are with taking risks and what types of stocks you prefer to add to your brokerage account. But one simple approach to investing may help you: Consider what women are doing.
While there isn’t a one-size-fits-all approach to how people should manage their investments, some data shows that investments managed by women perform better than those managed by men on a risk-adjusted basis.
According to a Wells Fargo report from a few years ago, women may be better investors than men are because their investment behavior “tends to follow recommended investment principles more often than men’s.”
Here are three reasons why women do well with their long-term investing decisions.
1. Women are more patient investors
One crucial aspect of investing is to be patient so that your investments have time to grow. Quick decisions are often based on emotion, which can cloud your judgment and can be a quick way to lose money.
However, Wells Fargo data showed that women excelled at being patient investors. The results showed that single women tended to trade stocks 27% less frequently than single men.
The report also mentioned that overconfidence — which male investors tend to have more of — can lead to more frequent trading, which often results in lower investment returns.
2. Women are more disciplined investors
Another interesting piece of data from the Wells Fargo report showed that women were more disciplined in their investing approach, leading to higher risk-adjusted returns.
For example, single women had the highest risk-adjusted returns on their investments, compared to joint investment accounts with men and compared to accounts led by single men. Additionally, women who invested independently had better risk-adjusted returns than accounts shared with men, even when women led the investing decisions.
Wells Fargo also cited a Betterment study that found men were twice as likely to allocate 100% of their investment into stocks — which are inherently riskier — than women were. Women were also six times less likely than men to make huge investment allocation shifts, like moving 100% of stock investments into bonds.
3. Women are more willing to learn
Finally, the report showed that women may have more of a willingness to learn, which may end up making them better at investing. Wells Fargo said that more than half of women worked with a financial advisor, compared to under 40% of men.
Separately, a Fidelity report about women and investing found that 62% wanted to increase their knowledge of investing and financial planning, and 44% planned to reach out to a financial planner within the next year.
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There’s a lot you can learn no matter who you are
Whether you’re confident in your investing approach or just getting started, there’s always room to learn more. Here are a few points to keep in mind.
1. Find the right brokerage account
There are lots of accounts to choose from, but taking a look at some of the best online brokers for beginners and comparing what they offer is a great way to get started. This may include looking at some investing apps and selecting the best one for you.
2. Overcome your fear of investing
It can be overwhelming to some people to take their hard-earned money and put it into the stock market. If you feel that way, you may want to read a firsthand account of someone who overcame her fear of investing. One way to help you be more confident may be to invest in an index fund that tracks the broader market and doesn’t require you to pick individual stocks.
3. Don’t go it alone
Just like the Wells Fargo data suggests, it could be a good thing for you to hire a
financial advisor, especially if you’re just getting started in investing. You’ll quickly learn
more about the investing world and begin building wealth at the same time. If you’re
unsure about hiring a financial advisor, you may want to consider using a
It’s worth remembering that no matter how much investing experience any of us have, we could all use more patience and some additional learning. Now, if you’ll excuse me, I need to go ask my wife where we should put our money.
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