It’s no secret that substantially more men invest than women – but don’t be fooled by the numbers. Research shows that when women DO invest, they actually perform BETTER than men.
This is because women possess qualities that give us a real edge in the markets. Women tend to be long-term planners and approach risk differently to men, so we’re less likely to see large swings in our portfolio values. This means a steadier growth in our investments over time.
Research by Alliance Trust in November 2022 found that women are more likely to hold their nerve when the market dips – or plunges, such as at the start of the global pandemic – and not crystallise their losses by selling their investments.
Of the 730 investors interviewed, 48 per cent of men admitted having sold investments at a loss to try to avoid losing more money, compared to 38 per cent of women.
Similarly, 17 per cent of men stopped their regular investment payments because the markets dropped and 24 per cent reduced them, but this is only true for 12 per cent and 21 per cent of women, respectively.
Alliance Trust commented that women’s steadier approach to investing protects them from a so-called “impatience tax” and is likely to result in much better financial performance.
Better returns than men
A study by Warwick Business School in 2017 of 2,800 UK male and female investors found that the women achieved considerably better returns than their male counterparts. While the men managed an average annual return 0.14 per cent higher than the FTSE 100, the women outperformed the benchmark by 1.94 per cent.
The research found that, typically, women only traded their investments nine times a year, compared to 13 for men. Professor Neil Stewart, who led the research, said this shows women tend to invest to support long-term goals, rather than simply for the thrill of investing. As a result, he said, they were more likely to achieve better returns.
A separate study by Hargreaves Lansdown revealed that, over a three-year period, their female clients saw the value of their investments grow 0.81 per cent more, on average,
than their male clients. Over a 30-year period, this could translate to returns roughly 25 per cent higher than men’s.
So, what are you waiting for?
Taking the first important step into investing will give you an enormous confidence boost – and the chances are that once you’ve started, you’ll never look back.