When it comes to the investing battle of the sexes, according to available data, men tend to be more confident investors than women. If you make a comparison of the investing habits of men versus women you’ll see some similarities; however, men typically demonstrate more surety in their investments than women. Yet, being bold doesn’t necessarily guarantee more success.
A team at of Berkeley’s Haas School of Business carried out a study on the investing battle of the sexes. They looked at male versus female investing trends over a 6-year period; the study provided proof that women outperform men in investing returns. Fidelity Investments conducted its own research, which was consistent with Berkeley’s Haas School of Business findings. It confirmed that women tend to do a better job of diversifying their portfolios without taking unnecessary investment risk like the men.
These studies do not imply that female investors save more money than men. On the contrary. Despite the good savings habits of women, their retirement savings tend to be smaller than men; which likely boils down to income difference. So what can women do to win the investing battle of the sexes?
Generally speaking, men continue to earn more than women across the board; although there are always exceptions. For every dollar men take home, women only earn $0.76- $0.79. Meaning, if a man makes $50,000 a year, then his female counterpart in the same industry earns $38,000. This scenario limits the amount of money a woman can save. The disparity in wages is a significant factor to consider in regards to a woman’s saving and spending power.
The secret to success for females? Play an active role in your financial future most. Especially if you are the type that still has a lot of time ahead of you to work.
For this reason, it’s crucial for every woman to make wise investment decisions. An example of that, avoiding and limiting their trading volume and overexposure to risk. Again the Berkeley states that men tend to engage in roughly 45% more trading activities than women. Which in turn, reduced net returns for men by almost 2.65% each year. Compare that to just 1.72% for females. Because data shows women make smarter investment choices than men, it’s evident that such decisions by women play a very significant role in helping them bridge the income gap.
While men might be considered to be more confident when it comes to investing, women are better when it comes to saving. In a report by Fidelity, they estimated that women save an average amount of 8.3% of their income, whereas the men only save 7.9%. Data from a similar study available from Vanguard says women are 14% more likely to sign up for an employer’s 401(k) plan than men; which is why women typically save anywhere from 7-16% more than men.
If you’re a man and want to get ahead,l take a more proactive approach. Even if you’re behind in your retirement savings, all you need to do is to start. Start NOW and contribute as much of your salary as possible. The earlier you start saving, the longer your money grows. If you save $500 a month over 25 years, your nest egg is $438,000. However, if you decide to increase that to 35 years and your investments generate an average annual return of about 8%, you get a whopping sum of $1.03 million.
Let’s assume you save $1,000 a month over 25 years instead of $500, then your savings for retirement is $877,000. If we assume the same 8% average annual return as above, you’ll derive a very similar effect despite saving for a lesser period of time.
When it comes to the performance of your investments if you really want to achieve something meaningful in life then consider investing heavily in stocks. Over the years, stocks tended to outperform bonds; even though bonds are safer and less risky.
Women usually shy away from the stock market due to a lack of financial knowledge, investing skills, and confidence. So if you’re a woman and want to get the most of your investments, consider getting the necessary financial advice from your CERTIFIED FINANCIAL PLANNER™ and enter the market more. You’ll gain more faith in your investment options and better navigate the stock market. Or just do more in-depth research on how to succeed in the stock investment.
So when it comes to the investing battle of the sexes, no matter your gender or the amount of money you earn monthly, you can still make smart investment decisions that financially secure your retirement.