You’ve seen the research. It shows that women are better investors than men, with their portfolios outperforming men’s by about 1% annually. The reasons given for this are as follows: Women take more of a long-term perspective. Women trade less often than men. And this is in part because women report that incomplete information makes them considerably more nervous and less likely to take action than men. So are women better investors, or are they just more risk-averse? And does the reason even matter?? In fact, it may. Because if some significant portion of women’s investing outperformance comes down to risk aversion, the “better” investing crown could be because conservatism has paid off during the tougher markets of the past decade-plus. In a more robust environment, such as the recent bull market, a higher risk profile can lead to higher returns, over time. Here’s the challenge for women: we may need those higher returns. We live longer than men, on average five years longer….we are more likely to need long-term care, and for longer, than men….and our retirement savings average just 2/3s of men’s. So saving and investing for retirement are even more important for women than for men. What’s the answer? There’s no silver bullet. Invest early and steadily. Recognize conservatism in investing and challenge yourself on how risk aversion can actually work against you. Protect yourself through products such as long-term care insurance (see “The Investing Mistake Almost All of Us Make"). Oh, and ask for a raise at work. Photo: Joerg Steffens/OJO Images/Getty Images Featured on:
Posted on: Wed, 10 Jul 2013 09:53:01 +0000
Trending Topics
Recently Viewed Topics
© 2015