Are Men or Women Better Investors?

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men vs. women investing, men, women and money, battle of the sexes, investing, forex
Ah yes – the never-ending interest in explorations of the differences between men and women in different financial issues rolls on on My Personal Finance Journey! 
 
Today, I am interested in doing a little research and hypothesizing about whether or not men or women make/are better investors.
 

Cue the Stereotypes…

 

However, before we get started digging in to the actual facts, let’s explore some of the possible stereotypes of men vs. women I found on the Internet that might contribute in some shape or form to one sex emerging as the better investor. 


  • Men never admit when they are wrong (read – overconfident).

 

  • Men never ask others for directions/advice when they need it.

 

 

  • Men don’t listen to other people that well. 

 

 

  • Women let their emotions guide them too much. 

 

 

  • Women take forever to make a decision.

 

 

  • Women tend to leave the household finances up to men.

 


Not surprisingly based on the history/lack of use-fullness of stereotypes, these stereotypes don’t really help us too much to make an informed decision about whether men or women have a better track record as investors. 
 
So, let’s proceed to some more factual information, shall we?
 
 

Men vs. Women Stock/Mutual Fund Investing Track Record

 

In doing a Google search, I quickly found that this topic/question has been explored from MANY different angles in the past. One thing that was fairly surprising is that while there were a lot of posts/articles that discussed and hypothesized about this question, there were relatively few numerical studies that ventured to give definitive answers.  


 
Nevertheless, listed below is a summary of the facts I found about the men vs. women investor question:
  • Value Walk  recently reported that between 2000-2009, hedge funds run by women returned 9% on average, compared to only 5.82% for hedge funds run by men. This was despite the fact that 97% of hedge funds are run by men.
  • Side note: During this same time, the S&P500 index returned -26%. Yikes!! 

 

  • The Wall Street Journal recently reported that several finance professors performed a study which found that women’s risk-adjusted annual returns were 1% higher than that of men. 

 

 

  • Vanguard (my personal favorite for low cost investing) reported in 2011 a large number of comparative facts between men and women investors:

 

  • Women are 10% more likely to join their employer’s retirement plan – a definite benefit for tax-sheltered investing. 

 

  • Women save 10% more of their income than men. 

 

 

  • Women are about 10% more likely to be better diversified with fixed income investments than men (which protects their nest egg in the event of a market decline). 

 

 

  • From 2007-2009 (during the market decline), men were 10% more likely to abandon stocks than women. This enabled women to take advantage of the huge increase in stock prices that followed from March 2009-present. 

 

 

  • In 2001, a study found that men were 45% more likely to make frequent trades than women. As passive investing knowledge dictates, frequent trading decreases returns, more often than not. 

 


In my opinion, the facts above CLEARLY establish that women are indeed better investors and have a better track record than their male counterparts. And, not only this, I think that the facts shared by the Vanguard article are sufficient evidence for WHY this is the case as well. 
 
How about you all? In your experience, are your male or female friends and/or family members better investors? 
 
What are your opinions of the stereotypes I found on the Internet above? Do you think they are true and play a role in making men or women the better investor? 
 
Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/johnthescone/2541001551/sizes/l/in/photostream/

Comments

  1. Great post… In our experience, Male investors/traders tend to associate “being right” much more with the correctness of their calls as opposed to women who tend to associate “being right” with their profitability. That said, the number of profitable male traders we know far exceeds the profitable females… likely because more males go into trading so we will have to encourage more female traders in order to produce better data.
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