I have a feeling I might annoy the male-dominated personal finance blogosphere with this one, but I think that in general, women tend to make better investors (though I would say that the owners of this blog are an exception because they are big fans of ETFs – exchange traded funds – and there is very little speculation with these). They also focus on cutting costs to the bone by investing through their Questrade account instead of trying to beat the market at a big-name bank where trades are much more expensive – but enough about them!
The other day I was going out for dinner with my boyfriends male friends. One of his friends does day trading or trading at home for his job. The conversation inevitably turned into investing, as it always seems to do when you get a bunch of guys together. They were talking about REITs (Real Estate Investment Trusts) and other hot stock tips. In the past, I would get excited about this and take mental notes about where to invest my money in next.
As the years have gone by I have learned my lesson in investing to not listen to “hot stock tips” especially at the water cooler or from a bunch of guys (buying Sun Life, Luxottica, penny stocks, Gold, Silver, and listening to Jim Cramer on television etc. later). Now, I am more careful, am more risk averse, and have learned that ETFs and dividend paying stocks are well, much more stress free and gratifying.
Related: Learn how to Invest in ETFs
Which leads me to the title of this post.
Do Women Make Better Investors?
According to US News, women make better investors than men because we are less competitive than men, we take less risks, we do more homework on equities and funds that we plan to invest in, and we realize (which I think is probably the most important thing) that we are not in control- that Mr. Market is in control. In fact, in a report done in 2012, women hedge fund managers outperformed male hedge fund managers by 6 percentage points over a 9 month period in 2012.
It is the testosterone that drives the thrill seeking behaviour, the risk and the adrenaline rush for more adventure in the roller coaster ride they call the stock market. Another reason, MSN Money says why women make better investors than men is because women are more objective, seeking the facts and making their analysis before taking action. Men on the other hand, are more spontaneous, more emotion driven when they make their stock buying and selling decisions. In addition, men are less likely to admit mistakes and are apt to hold on to a nose-diving investment longer before cutting their losses.
The Facts Say Women Make Better Investors…But
I do agree that on the whole, women can make better investors, but I find that a lot of women (a lot of women I know, anyway) are a bit too risk-averse. They have their money socked away in GIC's and high interest savings accounts at their preferred online bank (better interest rates and more convenient), when they could be investing it in some index funds instead. I have spoken to a few of my friends, offering to help set them up with a TD e series account or an even more simple robo advisor account at Wealthsimple, but they have declined for now, worrying about the risk of indexing and the stock market. Which is a valid concern, of course, but considering that GIC's and high interest savings accounts only give you a marginal rate of return that is less than the costs of inflation, it might be a better idea to add a little risk in to gain more return.
In summary, I think that women can make better investors but they need to put their foot in and dip it into the pool rather than sit on the sidelines and watch people have fun in the pool. You can have fun in the pool if you don't know how to swim, just hang out in the shallow end first. Weird analogy I know, I just thought of it now.
Also, women interested in getting started with investing should read Smart Women Finish Rich by David Bach. I find that financial books all say the same thing but they do give you the inspiration to take that first dip into the pool.
Lets face it, women are just superior to men. ‘Nuff said.
I'm kidding! 🙂 Don't worry, I am not that feminist 😉 Though financially independent women are a turn on, right?