THINK about The Wolf of Wall Street or The Big Short and it’s no wonder that many of us assume men are the better investors.
With the depiction of a male-dominated field, you might be surprised to find out that women actually outperform men when it comes to generating returns on their investments.
The latest findings from the big investment firm Fidelity, based in Boston (U.S), says that female investors have been outperforming males in the past decade.
Supporting that data is Openfolio, an investment tracking app, which found that women have topped men every year for the past three years since the app began tracking results.
Let’s take a closer look into this.
Based on the findings, men have a tendency to buy and sell stocks too often, in an attempt to time the market which ultimately, eats into their returns.
Whilst women, in contrast, tend to be ‘buy and hold’ investors, which means placing your money into cheap index funds and not touching it for years or even decades!
This is much more aligned to the artful mastery preached by money gurus like Warren Buffett. Seems like women do a better part of keeping their emotions in control when it comes to investing!
What lessons we can learn from the way women invest?
Think long-term: It’s tempting to try to time the market to reap the most rewards in as short of a timeframe but this actually works counter-intuitively for investments.
Women tend to think more long-term and have a clear idea of a goal they are working towards.
Start young, start early, invest your money over a longer time period and watch your money grow. Patience is key!
Invest in something you love: Women tend to invest in things they know, and avoid taking too much risk on investments they know very little about.
Men may be quick to jump on whatever they think will give them the best returns even it comes at a high-risk.
Try to invest in what you know and love, an investment that has more personal interest makes you will most likely take your time studying it, the trends, the progress.
Don’t trade too often: Women tend to play it safe when it comes to investing and this could be the number one reason they outperform men.
Men tend to be a little more competitive when it comes to investing and at times, a little overconfident.
Blame it on their testosterone or simply because trading rooms tend to be dominated by equally optimistic males, whatever the possible cause, men (more so than women) believe they are able to beat the market and trade accordingly.
While the data from the Fidelity Investments research is largely representative of a US population, this may be a good time for women in Malaysia to take heed and follow suit.
Celebrate our abilities to plan for the long-term, to take on less risk, to practice patience.
And if you don’t feel like you are financially literate in the field of investments, it’s never too late to start learning.
The reality is, it’s no longer enough to just save money to keep up with the pace of inflation. We also need to think about investing our money to generate healthy returns.
And seeing as women tend to better at it than men, what do you have to lose?
“It is not about timing the market, but time in the market that matters” – Ann Wilson
Nadia Khan is content manager at https://www.comparehero.my/ dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, personal loans and broadband plans in Malaysia.