Published in the April 29 – May 12, 2015 issue of Morgan Hill Life
By Marisa Otto
Marisa Otto
Several years ago, a best-selling book titled “Men Are From Mars, Women Are From Venus” argued that men and women are vastly different, particularly in their emotional needs and in how they communicate. While not everyone agrees with the notion that men and women might as well be from different planets, most of us would probably concur the two genders frequently behave differently — and this divergence in behavior may also show up in the way we invest.
In fact, various studies and anecdotal evidence suggests these differences in the way that men and women invest:
• Men tend to trade more often and seem to buy and sell investments more frequently. This difference could result in an advantage for women investors. For one thing, if women do trade less, they may incur fewer commission charges, fees and other expenses, all of which can eat into investment returns. Also, by holding investments longer, women may be able to take better advantage of market rallies. During the 2008-2009 financial crisis, for example, men were more likely to sell shares of stock at market lows, which led to bigger losses among male traders — and fewer gains when some of the stock values began to rise again — according to a study by Vanguard, a mutual fund company.
• Men tend to invest more aggressively. Perhaps not surprisingly, men seem to be more willing to take risks with investments. This can be both positive and negative. On the positive side, risk is associated with reward, so the more aggressive the investment, the greater the potential for growth. On the negative side, taking too much risk pretty much speaks for itself. Ideally, all investors — men and women — should stick with investments that fit their individual risk tolerance.
• Women are more likely to look at the “big picture.” Although both men and women investors want information, women seem to take a more “holistic” approach — that is, instead of focusing strictly on performance statistics, they tend to delve deeper into their investments’ background, competitive environment and other factors. This quest for additional knowledge may help explain why all-female investment clubs have achieved greater returns than all-male clubs, according to a study by the National Association of Investors Corp., which represents thousands of investment clubs across the country.
• Men may be more optimistic about financial markets. Some studies show men are more optimistic about key economic indicators and future stock market performance. Optimism can be a valuable asset when it comes to investing. On the other hand, false optimism may lead to over-confidence, which can have negative results.
Neither gender has a monopoly on positive investment behaviors; each can learn from the other. Ultimately, it’s your decision-making, not your x- or y-chromosomes, that will determine your ability to make progress toward your long-term goals. So educate yourself about your choices, and get the help you need from a financial professional.
Marisa Otto, CFP®, Financial Advisor, Edward Jones U.S.A., can be reached at (408) 778-4400, at [email protected] or visit www./edwardjones.com.
