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It's the battle of the sexes! Do men or women make better investors? What does the science say? We look at male vs. female investors and you may be surprised with the results.

Over the last few years, the dearth of women in powerful C-suite positions in the financial industry has come under growing scrutiny. Men tend to dominate banking, venture capital and investment industries, and this dominance has given rise to widely held yet unsubstantiated belief that the male gender is simply more skilled when it comes to understanding numbers and finances.

Luckily, times are changing. Over the last decade, there’s been an increasing body of research that has started to challenge old-school, stereotypical notions about women and finances. Much of the research focuses on men’s and women’s investing habits and abilities. The stock market, mutual funds and ETFs are commonly seen as one of the best ways to grow individual wealth, hence the different ways in which men and women approach investing is of particular interest to researchers.

So, what are the findings? Do men have some natural ability with numbers that justifies their overwhelming dominance in the investment industry? In a word: nope! In fact, according to some studies, women actually make better investors than men.

Male vs. Female Investors: What Does the Research Say?

Take for instance the 2018 Warwick Business School study, which noted that women were “found to outperform men at investing by 1.8 percent.” Furthermore, The Financial Times notes thatA separate study by Hargreaves Lansdown, the UK’s biggest consumer investment platform, also found that women investors had the edge, returning on average 0.81 percent more than men over a three-year period. Hargreaves points out that if this pattern were to continue for 30 years, the average woman would end up with a portfolio worth 25 percent more than the average man.”

The studies go on to theorize that women’s successful investment returns are in large part due to qualities frequently associated with women like risk aversion, a distrust of speculative funds and favouring a slow-and-steady investment approach.

Tuula Jalasjaa, founder and CEO a new robo advisor for women called Smart Money for Her, believes that women make better investors than men in part due to behavioural traits related to money management.

“A lot of recent research and studies tend to support the theory that women make better investors,” Jalasjaa says. “One example of such a study is Fidelity Investment’s research from 2017, where the finding showed that women earned higher returns on their investments than their male counterparts by approximately 0.4 percent.”

However, Jalasjaa says to take the study with a grain of salt. She points out that the mismeasurement in these studies is the pool size – there are a lot more men to include in these studies versus women, and the women investors who are in the pool are probably more financially literate than the men in the sample.

“I don’t think it’s a completely fair comparison just yet,” she says. “But moving the sample sizes aside and focusing more on behavioural traits as it relates to women and money – women do have an advantage.”

So, the future looks bright for women investors—right? Not necessarily. There are some big issues and questions that the above studies don’t tackle. For instance, if qualities like risk aversion and taking the long view are so favourable, why aren’t women enjoying more prominent roles in the investing field?

Context Is Key to Understanding Female Investors

Not all economic experts are quick to embrace the notion that women have inherent traits that naturally make them better investors. In fact, some experts suggest that if women are to reach their full potential in the realm of finance and investing, issues like better incomes and a more inclusive investing environment are key.

Sarah Kaplan, Director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School of Management, doesn’t believe women naturally make better investors than men. Kaplan highlights the importance of analyzing complexities surrounding women’s participation in investing, as well as breaking down gender stereotypes.

“Intrinsically, research shows that there is no difference between men and women in terms of risk propensity or other investing-related characteristics,” says Kaplan. “In fact, some studies show that — controlling for education, experience and income — women are actually more risk-seeking than men. However, because investing has historically been seen as a masculinized domain, women are made to feel that they don’t belong – which could drive them to be more careful with their investment strategies and avoid losses, because they are worried losses will reinforce stereotypes about women and investing.”

Furthermore, women tend to have lower salaries on average than men, and therefore, have less to invest (or more to lose). This may lead them to adopt less risky strategies that could otherwise result in bigger gains.

“Women participate less in stock markets (even after controlling for a large set of individual characteristics, such as income, financial wealth, education) and when they do so, they participate to a lesser extent,” says Claire Célérier, an Assistant Professor of Finance at the University of Toronto’s Rotman School of Management. “However, when we investigate other settings, there is no evidence that women are more risk-averse. One possibility is that women are less willing to contribute to financial decisions because finance is stereotypically outside their gender’s domain.”

The Verdict: No Clear Winner

Obviously, there’s a lot of conflicting research out there on whether women make better investors than men. What does seem clear, however, is that for women to fully participate in the world of investing, they’ll need to attain income parity with men and be nurtured to develop better financial literacy and the confidence to enter a traditionally male-dominated field.

While there may be no simple answer as to whether men or women are better investors, robo investing is a wonderful way for would-be financial whizzes (male or female) to experiment with ETF investing and the stock market. A robo-advisor is a perfect platform to get started managing your investments online and still get some human support when needed. Robo investing is an especially ideal option for women who often may lack the confidence to enter the “masculinized” domain of investing. Using a robo advisor allows an investor to save money on fees and often reap respectable returns even if they have very little experience with investing.

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If you liked this article, you may also like:

What is ETF Investing?
The Best ETFs in Canada for Young Canadian Investors
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Article comments

Adam says:

I think if you compare yourself to a group of guys who trade ‘hot stock tips’ (not the sharpest knives in the drawer) then you will inevtitably look better. Also there have been a lot of months before, and after ‘a 9 month period in 2012’ which it would be worthile looking into before concluding that women are better investors.

Kyle says:

Do you think it’d be fair to say there are more guys that follow “hot stock tips” than women Adam? In my experience men want to swing for the fences far more often then solid production at each at bat.

Jason says:

“Though financially independent women are a turn on, right?”
Yeah they are!
Andrew Hallam also had a chapter in his book “Millionaire Teacher” that addressed this and had some good points. I am amongst the stubborn men myself so no, boys rule and girls drool. Kidding! I do agree. You win girls.

Kyle says:

Huge fan of the book Jason. Thanks for stopping by!

I totally agree with this one, I have read in some blogs that women are really making a better investment rather than man. But in some point, it depends how educated woman are and their solid background of experiences.

Phil says:

I hear what your saying and have read much data that supports what your saying, but I will say no. Life experiences and education with whatever you are investing in is what drives investing success. If you have a propensity toward the medical field, investing your time in this area can pay great dividends in life, or perhaps you are a great visualizer who likes to socialize perhaps real estate in more up your alley. Again, whatever you are investing, time or money, luck may have something to do with a small percentage of cases, but the bulk of life’s successes are from a build up over time of investments, of which arguably male, female, or or some percentage there of (there are transgender out there, don’t forget…) should make no difference. For my personal example, my wife is great at accumulating dollars from her job, but lacks on the side of how to have it grow once she’s got it. would I call her a better investor, probably, as she does make more than I, currently. I on the other hand do not work and as such manipulate here parked money… So am I a better investor? Yes when compared to her money sitting in a bank account, but as yet not to making as much as she is bringing in with her job by me investing what she has accumulated. It’s all about perspective. invest in what you do best for the best long-term return in life – Cheers.

Young says:

@Phil- I totally agree with you here 🙂 A lot of my girlfriends don’t invest in the stock market, but they do know how to save! I’d say of about 8 girlfriends I have, only about 1 invests directly in the stock market.

Phil says:

So to your topics related to dating, you seem more to my mind set than my wife’s, which means you should try and find someone to date that first off sets off butterflies in your stomach, because that’s what true love is all about – my wife IS my best friend… once you wade through that field you want to make sure they are compatible with your money thoughts. Please note not opposite, and not the same… compatible. opposites who attract rarely work out in the long run… So my thought for you is to find someone who has a good head on their shoulders, but might not have the investment savvy you have, in which case you will compliment them and can help them grow as a person. This goes for most attributes… So to summarize, relationships flourish when there are complementary differences in personalities and life skills, so look for people who might complement your weaknesses and enjoy a happy life working together to solve life’s mysteries – cheers.

Young says:

@Phil- hmm food for thought!!