Women are more careful about investing then men.
In most aspects of life, men and women are different, and that is true about investing money as well.
In general, women investors conduct fewer trades then men do, and men are overwhelmingly more aggressive in their trading patterns than women. According to research performed by Brad Barber and Terrance Odean from the University of California, Berkeley, men are not only confident but overconfident about their abilities to read and profit from the stock market and financial trading. Women are more cautious, which turns out to be more profitable in the end.
Using 35,000 households in their research, the Berkeley researchers found that men trade 45 percent more than women do. The men’s returns on investment were one percentage point lower than the women’s.
Single men trade 67 percent more often than single women do, and the difference in rate of return is almost 1.5 percentage points in favor of women.
Women turn 53 percent of their portfolios over annually, while men turn approximately 77 percent of their portfolios over annually.
The evaluations by the researchers were that women trade more rationally, keeping emotion, ego and greed out of the process. Women also expect less in terms of return then men, so they are less likely to take big risks in investing.
In a Spectrem Group study of men and women investors, 28 percent of women were willing to risk a significant portion of their portfolio for the possibility of a high rate of return, while 43 percent of men said they would take that risk. However, 69 percent of women said they thought their financial situation would be improved in one year to just 53 percent of men.
Research has also shown that women save more than men. According to a study by The Vanguard Group, more women participate in their retirement plans at work than men, and they put more of their paychecks into the savings then men do.
The Spectrem research showed that 72 percent of women investors prefer to use a financial advisor to some degree in making investment decisions while only 62 percent of men use an advisor.
The Spectrem research also showed that 48 percent of men admit they enjoy investing to just 38 percent of women, and 55 percent of men want to be actively involved in the day-t0-day management of the investments to just 37 percent of women.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.