Women, Men and Investing: We Debunk the Myths

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Women, Men and Investing: We Debunk the Myths

There’s a myth that has permeated the financial services industry for decades: that men are better investors than women. But it turns out that assumption is simply not the case.

According to a 2016 Fidelity study, female investors tend to outperform male investors by an annual average of 0.4%. This doesn’t seem like much, but it accumulates to a significant financial difference over time.

For example, let’s say a man and a woman each invest $100,000. Assuming a 4.6% average annual return for the man and a 5.0% average annual return for the woman, her investment will have grown to $432,200 after 30 years, while his will be valued at only $385,400. That’s nearly a $50,000 difference and is half of the original investment!

Why Are Women More Natural Long-Term Investors?

First, men tend to buy and sell their investments more often. The same Fidelity study found that men made an average of 55% more trades in 2016 than their female counterparts. This can be financially injurious because the more an investor trades, the more he risks making an investment right before it decreases in value or selling the investment right before it gains momentum. Because women are more likely to hold on to their investments throughout market fluctuations, they capture more growth over time.

Digging deeper, why do women hold on to their investments longer? There are a lot of reasons. As women, we usually conduct more research before investing and maintain a long-term perspective more often. We tend to view investing less as a game to be won and more as a means to accomplish our goals. Regardless of the psychology, women’s success in the investment world is good news.

Rewrite the Rules with The Humphreys Group

The media portrays investors as men in suits walking down Wall Street. But the data tells a different story. Let’s keep breaking the money stereotypes that have held women back for way too long. Read more about common money myths in our free eBook, “Rewriting the Rules: Telling Truths About Women and Money.”