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.”

Diane Bourdo, CFP®
Diane Bourdo, CFP®

Diane Bourdo is the President of The Humphreys Group. Diane has dedicated her life’s work to helping women make smart financial decisions. For nearly 30 years, she has developed investment management and financial planning strategies that allow her clients to create lives that reflect their values. Diane was named an InvestmentNews 2020 Women to Watch and has been recognized in Forbes, SF Chronicle, NY Times and more for her work and writing.

Diane Bourdo, CFP®
Diane Bourdo, CFP®

Diane Bourdo is the President of The Humphreys Group. Diane has dedicated her life’s work to helping women make smart financial decisions. For nearly 30 years, she has developed investment management and financial planning strategies that allow her clients to create lives that reflect their values. Diane was named an InvestmentNews 2020 Women to Watch and has been recognized in Forbes, SF Chronicle, NY Times and more for her work and writing.

Share our Post
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email
Share on print
Print

Related Posts

Humphreys Group - Rewriting the Rules 2nd Edition Book Cover

If we made women’s unique strengths, concerns, and preferences the financial norm, what would we see?

Learn to invest like a woman.
Get your free copy of the book today!