Men vs women: who’s better at investing?

Who is better at investing when it comes to men vs women? Recent research shows that men and women have different investment approaches. We take a look.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

happy senior couple using a laptop in their living room to look at their financial budgets

Image source: Getty Images

The rules of smart investing are gender-neutral. That goes without saying. Yet, a growing number of studies have explored the ‘men vs women’ debate and show a significant difference in the way their investments perform.

Does that mean that one gender is more adept or diligent in following the rules of good investing? When it comes to men vs women, who exactly is better at investing and why?

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Let’s try to find out.

Men vs women: who wins at investing?

You may have heard that women are supposed to be better at managing money than men.

Well, when it comes to handling investments, it appears that there might be some evidence to back this saying. Several studies suggest that women are generally better at investing than men. 

A study by investment firm Fidelity that analysed more than eight million customer accounts found that women performed better on their investments than men by 0.4%. At first glance, that might not seem like much.  But over time, 0.4% can have a huge impact.

Another study from Warwick Business School involving 2,800 investors found an even bigger performance gap between the two genders over a three-year period.

While the annual returns on investments for men averaged 0.14% above the performance of the FTSE 100, women beat the index by a respectable 1.94%. In a nutshell, women’s returns from investments outperformed those of men by 1.8%.

Why are women better at investing than men?

As it turns out, the better investing performance of women is not down to mere luck.

The real reason is that men and women have different strengths and weaknesses that often translate into different investing approaches.

More often than not, it’s the approaches of women that tend to yield better returns, suggesting that men can perhaps learn a thing or two from women.

The different investing approaches of men vs women can be summarised under four headings.

1. Investing goals

Research indicates that women generally trade their shares less than men (nearly half (49%) as frequently according to a report by HSBC Private Banking).

This is attributed to the fact that men tend to focus on short-term portfolio performance, which often leads to impulsive and frequent trading. More frequent trading means more brokers’ fees, commissions and other expenses.

On the other hand, women tend to be focused on the longer term. They hold onto their investments for longer, riding out the ups and downs. They are less likely than men to sell during times of uncertainty.

2. Risk appetite

Women adopt a more conservative approach, focusing on tested and trusted shares with a good track record. Men tend to be more speculative, taking more risky positions, including investing in new and untested shares.

3. Research

Men do less research than women and are often more independent and impulsive. Women research their investments comprehensively and also spend more time going over their decisions.

4. Attitude

Men tend to be more optimistic about their investment performance, which can lead to overconfidence and overestimation of their abilities. The ultimate result is a more aggressive and risky approach to investing.

Women tend to adopt a more pessimistic outlook, which often protects them from bad investment choices. The downside is that this can sometimes lead to missed opportunities.

What do these findings teach us?

Based on the above analysis of men vs women, some could say that men should start investing more like women.

On some level, this makes complete sense. For example, the prospects of successful wealth building through the stock market are much better with a long-term investing strategy than with short-term and speculative trading.

So, men could perhaps improve their investment returns by focusing on long-term investment rather than short-term portfolio performance which is often quite risky and unpredictable.

That being said, it’s important to note that there’s no right or wrong investment approach. No matter your gender, the most important thing is developing an investment strategy that’s based on your preferences and capabilities, and sticking with it.

If you are completely new to investing, take a look at our comprehensive guide to investing for useful tips and guidance on how to enter and navigate this world.

And if you are already well versed in investing, check out whether you could get more out of your investments with one of our top-rated stocks and shares ISAs with which all of your gains will be tax free.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »