If we look at the investing world globally, it is heavily dominated by men. It could very easily lead to the conclusion that men have an edge when it comes to taking money decisions but nothing could be farther from the truth. None other than one of the largest financial firms, Fidelity, released data to support the fact that women are a better investor than men. The company considered for its study data from more than eight million investments globally. The data revealed that women save as well as earn more from the investments they make annually, both figures being 0.4 per cent higher than men.
While at the outset 0.4 per cent may not look like a big number but investing works on a principle of compounding. So taking the results and extrapolating them over let’s say 20-30 years, in other words, a lifetime of investing as well as saving decisions for a salary of $ 50000, women can make as much as $ 250,000 more than men. But to understand the skewed perception of people better, a survey conducted on investing prowess by Fidelity’s partner revealed that only 9 per cent of the participants responded that women were better.
To dig down deeper into the reasons which make women better investors, Fidelity Investments analyzed several factors. Men are more likely, by around 35 percent when compared to women, to make trades. This translates into a higher amount of trading fee which cuts into their portfolios’ profits. Another big factor was savings. Women are more diligent when it comes to putting money aside by an entire percentage point. It could be in terms of the employer-offered plan, individual instruments and other avenues. Fidelity also found that women took a balanced approach toward investing. They are less likely to go all-in into riskier allocations like equity and tend to diversify their investment portfolios to balance out the risk factors.
These results are corroborated by another study done by two researchers at the University of California. They also found that women beta men by one percentage in terms of investment decisions. Women have a better long-term vision, save more at a regular basis and do not try their luck with market timing trades while men find market trades as a sort of adrenaline rushes which they can boast of later over drinks.