A recent study set out to find out whether men or women were
better at investing. And, while people often joke that women are bad with
money, the study proved otherwise. It showed that women’s investment accounts
fared significantly better than those of their male counterparts by 2
percentage points or more on average.
Fortunately, the study didn’t just discover these results
and then end its research right then and there. It also sought to find out why
women’s investing skills tended to be better. The results concluded that
women’s accounts fared better because the women were more cautious and
conscientious with their accounts than their male counterparts. They didn’t
trade as often, limited their portfolio turnover, and shunned individual stocks
in favor of more fool-proof choices.
The proclivity toward individual stocks, for the record,
proved to be one of the men in the study’s greatest downfalls. Many people
believe that individual stocks are good choices since they can be basically
cherry-picked to suit the client and then traded for a nice profit in many
cases. However, these types of investments can often be risky and unlikely to
pay off, making them more dangerous and causing the males in the study to fare
far worse than the women.
The takeaway from the study shouldn’t be that women are
smarter or more responsible than men. It also shouldn’t be to avoid individual
stocks. It’s just a lesson in being careful with your money, very thoughtful
about the decisions you make, and ensuring that you have a wide and diverse
portfolio that isn’t too reliant on one particular type of investing. If you
can keep those tips in mind, it doesn’t matter if you’re male or female- either
way, you have a great shot at investing smart.
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