Invest like a woman: Female investing habits examined
by Peter Rosen ksl · KSL.comKEY TAKEAWAYS
- A 2021 Fidelity study shows women earn 0.4% higher returns than men.
- Women investors tend to research more and exhibit less overconfidence than men.
- Financial planner Tracey Dean advises having a plan and sticking to it.
SALT LAKE CITY — If you're worrying about dark clouds lurking over the stock market — inflation, the price of oil, the domination of big tech — and are unsure what to do, you might consider this advice: Invest like a woman.
In a 10-year period, women, in a 2021 study by Fidelity, earned .4 percent higher returns than men. That's not insignificant when you consider a million dollars invested for 25 years at 7.4% earns about a half-million dollars more than the same amount invested at 7%.
Westminster University instructor Matt Crouse, who teaches a finance class that manages the D.A. Davidson Student Investment Program fund there, says he definitely sees a difference between the genders.
Women, he says, tend to do more research and tend to exhibit less overconfidence.
"Overconfidence is one of the worst investing traits," Crouse says.
Overconfidence, he says, tends to lead to overtrading, which can cost you in taxes and trading fees.
The overconfident trader tends to invest in riskier stocks.
"Women are more cognizant of risk," Crouse said.
That seemed to be the case with students and Macie Edwards who, at the time KSL spoke with them, were concerned that the student investment fund had too much stock (36%) in Google's parent company, Alphabet.
It made the two women nervous.
"(It) does present downside risk," Edwards said.
The two had proposed investing in two healthcare companies to diversify the portfolio.
"In general, guys are more open to take risks, like high-risk investment," said student Roman Frost, while women's decisions are "based on more facts and not driven by emotions and high returns."
Financial planner Tracey Dean, speaking at the Utah Women's Investing Club, a Mavin District-based lecture series, told her audience that women, when it comes to investments, aren't swayed as easily by their emotions and tend to stay the course.
"So, we don't panic in (the stock market crash of) 2008. We hold and then 2009, what happened? It hit the roof. We did not collect all of our gains. It took 10-12 years to get back to normal," she said.
According to a 2008 study by the Nationwide Retirement Institute, 8% of female investors liquidated their retirement funds, compared with 15% of men.
"Males typically want to chase returns," Dean said. "I have this conversation in my office all day long. That we have, you know, husband and wife. (Men) want to be more aggressive, they want to chase returns. But you know what they're not talking about? They're not talking about their losses."
Dean said to consider how recovery from a 50% loss needs can only happen with a 100% return.
Matt Crouse, an experienced investor, said even he is not immune to overconfidence.
"Oh yeah, I see these traits in myself," he said.
After a successful trade, he said, "You get a rush of adrenaline, like you feel it feels good."
"After successes, I tell myself don't get overconfident because usually when I do, I get humbled," he said.
Dean offered this advice: "I literally have one word and it's have a plan, make a plan, stick to plan. And if we have to deviate, that's because we have an issue come up."
In other words: invest like a woman.
Photos
The Key Takeaways for this article were generated with the assistance of large language models and reviewed by our editorial team. The article, itself, is solely human-written.
Related topics
Peter Rosen