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Women vs men: who’s investing in what?

Women vs men: who’s investing in what?
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Understanding the different ways in which men and women are investing can give us some really useful insights. We’re going to explore the different ways each gender tends to invest their money and reveal what we can learn from each other.

Women or men: who’s better?

An increasing amount of research shows that women actually make better investors than men.

This is funny because when surveyed, 71% of men assessed themselves as having a high level of investing knowledge. In comparison, just 54% of women thought of themselves as highly knowledgeable. A study by Fidelity also highlighted that only 9% of women thought they were better investors than men.

So it’s pretty clear that men approach investing with a sense of hubris. Women tend to be more modest. Let’s see if investing styles reflect this difference in attitude.

What do women invest in?

Traditionally, women have been more risk-averse than men. This isn’t always a bad thing and is perhaps part of the reason why women outperform men when it comes to investing.

However, the gender pay gap has often left women with less disposable income or financial independence. As a result, women are much more likely to try to build up cash savings or look for low-risk investments in order to protect their wealth instead of trying to grow it.

Women typically put their money into:

Why are women investing this way?

One study shows that women hold 71% of their assets in cash whereas men hold just 60%. This is perhaps because of the perception of cash as a safe option. The problem, though, is that it’s unlikely to grow and will lose buying power over time due to inflation.

Many consider that real estate is another secure way of investing. Property is more likely to appreciate in value than cash. However, if money is tied up in a home, it can be hard to access and use it for anything else.

Preference for sustainability appears to be higher amongst women. A Morgan Stanley survey in 2017 revealed that 84% of women were interested in sustainable investing compared to just 67% of men. Sustainable investing also tends to have better female representation in decision-making roles such as managing things like ESG funds.

Another rising trend amongst women investors is platforms like eToro, where you can copy the trades of other investors. Choosing a method like this makes sense. Data shows women tend to have less confidence in their own abilities and so they are perhaps more open to learning from others.

What do men invest in?

With more confidence in their ability and building wealth being more of a priority, men generally prefer to invest in higher-risk investments such as:

  • Stocks and shares
  • Commodities such as gold and oil
  • Assets like Bitcoin
  • Investment funds and trusts

The figures vary a lot between countries and ages. For the most part, male-dominated areas of investment tend to be in areas with higher risks and rewards.

What can we learn from each other?

I think that combining some of the characteristics of both sides would create the ultimate investor.

Men tend to be overconfident in relation to their ability and take on too much risk. Women have less confidence when investing, which leads to an approach that is sometimes too cautious.

One of the best traits of female investors is that they are less likely to make impulsive changes or rash decisions. That said, the riskier approach to investing favoured by men can lead to higher rewards.

Communication and education will play a key role in bringing women and men closer together in their strategies. There are now a number of initiatives running in communities and even banks to try to encourage more women to invest. A continuation of more female-driven initiatives is going to be really important for the future.

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