How do you feel when someone asks you to do something like a girl? Offended? Humiliated? How is it that “like a girl” has an underlying meaning of weaker, lower quality and generally inferior than what a man would do? In 2014, Always launched a profound campaign redefining the meaning of “like a girl”. The campaign was a huge success and 76% of viewers after watching the campaign said they no longer viewed the phrase negatively (1).
In light of this, I caught myself wondering what investing like a girl means.
Investing isn’t a man’s world anymore; however, according to WealthiHer, women are half as confident as men when it comes to investing. Nevertheless, when they decide to invest, they seem to be better than men! One of the most famous and ground-breaking study on gender differences in investing is "Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment (2001)”, which showed due to overconfidence, more men fall victim to reduced investment returns. A recent study by Fidelity (2) covered 5.2 million customer accounts and concluded that when women invest, they outperform their male counterparts by 0.4% annually over a 10 year period.
I embrace equity and I believe that men and women are equal when it comes to our cognitive capabilities. However, if certain traits are perceived to be more feminine, then I am curious to know which ones would lead to higher figures in my investment portfolio:
- Long term focus. Women tend to take a longer-term view on finances which gives them a powerful advantage.
- High conviction. Women tend to trade at least 50% less.
- Research. Women spend more time researching their investment choices.
In my experience working as a client advisor, I noticed that women are more engaged in the “why’s” of investing. They are often more eager to develop a bigger picture plan before drilling into the details.
At the risk of sounding like I am stereotyping, next time you are making an investment decision, consider investing “like a woman”. Or at least consider balancing both approaches. It might pay off.
Whilst writing this blog, I found a book with the flashy title of “Warren Buffett Invests Like a Girl: And Why You Should, Too”. It should be an interesting book, let us know if you have read it.
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