Women seem to be better investors than men – What studies say?

There are not many women who seem to have interest in stock market but when they do, they are investing more intelligently then men.

Many studies have backed up the claim that the women investing in stocks are better at it than men. Fidelity Investments conduct a study recently that analyzed over 8 million client accounts and found that women are performing better than men by 0.4%. Study was published last year. It says, “At first glance this may appear to be a minor difference, but can have a significant impact over time”. A Barclays-sponsored Warwick Business School study found an even greater gender-based outperformance: 1.2%. And a narrower study of Finnish investors between 1995-2011 cited “evidence that females are superior traders.”

Why are women investing more intelligently?

Both the Fidelity and Barclays reports suggest that

  1. Women investors engage less in trading then men
  2. Women tend to buy and hold
  3. Women investing in stocks are more averse to risk

“Studies have shown men tend to be much more risk takers, when it comes to investing, to their own detriment because they trade too much,” Bankrate Chief Financial Analyst Greg McBride told Investor’s Business Daily. “Women tend to generate better returns because they don’t trade as often and tend to hang in there.”

The last finding is pretty surprising because shunning the stock market because of risk concerns can actually prevent you from taking advantage of the power of compound interest. A little risk awareness, while you are planning to invest can work in your favor.

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