Growing up in this era, women have been told that “it’s a man’s world” more times than they can count. The stereotype of the businessman remains at the forefront of everyone’s mind. However, these preconceived notions of what it looks like to be successful in business don’t actually align with the realities of today. If we are living in a man’s world, then why is it that over the last decade women have consistently outperformed men in the stock market?! Fidelity conducted a massive survey that assessed over 8 million accounts and found that, on average, women save more than men and their investments earn more annually! The reasons for women’s success can be attributed to a handful of shared characteristics that put them on top of the market:
Once your money is invested in the stock market, it’s easy to sit there glued to your screen, obsessing over its continual growth and decline with the tides of the market. It can be even easier to trade a stock when things are going great or in fear of things going south. The over-confidence displayed in some men translates directly to their portfolios and can cause them to trade far too frequently, hindering their portfolio’s overall performance. Women are better investors because they tend to sit back, watch, and think long term. You can never be too confident in a market that will do what it wants, and no one can outsmart its next move. In turn, this potentially saves women in the long run on short term investment tax issues and pesky trade fees that can quickly pile up.
When choosing a portfolio, men tend to choose risky options that would, in theory, build a mountain of wealth in a short period of time; women choose to play the long game and therefore take on less risk. A study done by BlackRock Investor Pulse supports this idea by finding that 72% of women refused to invest in riskier stock options, contrary to 59% of their male counterparts. Those high-risk investments have the possibility of paying off in a big way leaving you sitting pretty looking like the next Jordan Belfort. However, Jordan was the exception to the rule, and more times than not, you’ll end up getting burned. In addition, women save up to 9% of their annual salary, whereas men save 8.6%, according to Fidelity. This combination of risk adverseness and saving discipline contribute to the female gender having a better long term investment style. Characteristics that people think make women the underdog actually end up putting them ahead in this contest.
Although the data clearly shows that women experience better results, Fidelity’s survey indicates that only 9% of people thought that women were better investors. Being the underdog can feel discouraging! However, being aware of the ignorance of women’s financial capabilities is a perfect tipping point to act. Women can be tentative to make those first investment steps due to fear of the unknown or making financial mistakes with their hard-earned money. A good place to start is getting educated on the basics of how the market works and consulting with a financial advisor to learn more.
If you’re a woman who is considering investing her money, schedule a video conference with Demand Wealth today. The combination of the above three traits may make you a potent investor in today’s marketplace. Ask us about how the ‘Demand Hope’ portfolio, which focuses on companies that strive for gender and cultural diversity along with ecological sustainability, can enable you to invest without compromising your values.
This report is a publication of Demand Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.