Are women better investors than men?

Recent studies show that although women are less likely to invest than men, when they do, they tend to be more successful.

So why is this? Let’s take a look. 

Research from Fidelity Investments has found that women outperformed men by approximately 0.4% every year.

The findings were supported by research from Warwick Business School, which saw men fall behind their female investor counterparts by an average of 1.8% over a three-year period.

Hargreaves Landsdown, too, found that women returned 0.81% more than men over a three-year period in its own study on the subject.  

With these numerous findings pointing to women being better investors, it’s worth asking: Why is this the case? What are women doing right that men are doing wrong? And what can men learn from women with their investing techniques?

There is no silver bullet to being a successful investor. And really, it is through a combination of behaviours that women are statistically better at investing.

Let’s take examine some of them and how relate to the results of some of these studies.  

Female investors opt for quality over quantity 

Not only are there fewer female investors than men, but women who do invest tend to trade at a lower frequency.

The above-mentioned study from Warwick Business School found that while men trade 13 times per year on average, the number for women was just nine.

Meanwhile, Hargreaves Lansdown’s research saw women trading shares 49% less frequently than men.  

What does this tell us about the way women invest in comparison to men?

It suggests they are more focused on the bigger picture, giving their shares more chance to grow.

Holding onto shares is a proven way of growing wealth over the long term.

The Standard & Poor's 500 Index saw annual losses in just 11 of the 47 years between 1975 and 2022, underpinning the theory that more often than not, stocks will generate returns. 

Holding onto stocks rather than trading can also be cheaper as you’ll pay less in transaction fees.

So, rather than investing and trading with overconfidence or for the thrill, women take more time in deciding where they want to put their money.

And once they make their move, they will likely stick to it over the long term.  

Women often take fewer risks in their investments 

Numerous studies have shown that men take bigger risks than women, and this very much applies to their investing preferences.

A survey from BlackRock found that 72% of women rejected investments in riskier equities, while just 59% of men did.  

Of course, women aren’t always living by the tortoise-and-hare mantra.

But in pursuing less risky investments and taking a long-term approach, it is evident that there is a winning formula to be found here.  

Women may more likely to construct rounded portfolios that spread investment risk.

Diversification is a great way of riding out market volatility.

Fidelity’s study found that women created more balanced and diverse portfolios than men, who often opted to weight their portfolios in riskier assets.  

Education and external input are key 

It’s not by chance that women are more successful investors than men.

Their behaviour is not inherent — it is often learned, either through education or by seeking external advice.  

Research from Boring Money found that just 32% of women rated their confidence in choosing an investment account as six or more out of 10.

What does this mean? That they are more likely to undertake research before beginning their investment journey.

Men, meanwhile, may feel confident enough that they can make the call on their investment choices with little knowledge.

If the figures on men and women’s investing success are anything to go by, it appears failing to do your due diligence can be costly.  

Men are also less likely to take investment advice from experts.

Betterment found among its clients who deviated from its asset allocation advice, men were more likely to take on more risk and moved into a 100% stock allocation twice as often as women.  

What does the future look like for female investors? 

There are all sorts of reasons why women don’t invest as much as men.

Research shows they are more financially vulnerable and have less confidence when managing money.

Whether women need different financial advice to men is another question, but according to research, the future looks positive for female investors.  

They need only take a look at the comparison between male and female investors to feel more confident in their approach to investing.  

Perhaps the most crucial aspect of the research women should take note of is that female investors seem to have more of an eye on the long term, and this is of huge benefit to their chances of success.

With this in mind, it’s important to take action now to give yourself the best opportunity of long-term investment success.

The alternative is to keep waiting and give yourself a shorter amount of time to grow your assets.  

While saving within a pension has its tax advantages, there is a gender pension gap that is concerning for women.

To combat this, women can increase their pension contributions, while also seeking out risk-averse investment opportunities that will offer an additional source of income in the long term. 

Getting financial advice from one of our advisers is a great way of starting your investment journey on the front foot.

Get in touch with Unbiased today, and let us help you find your perfect financial adviser.