When it comes to finance and investing, men are often thought to have the upper hand. In a 2017 survey by Fidelity Investments, participants were asked whether they thought men or women were the better investors. Only 9% of women believed they could outperform their male counterparts.
However, research consistently shows that women may not only be able to keep up with men in investing, but even achieve more than them. In fact, women saw 0.4% higher returns over a 10 year period, according to a 2021 analysis from Fidelity.
While that may not sound like much, even slightly higher returns can amount to tens of thousands of dollars over time. Regardless of your gender, there are a few things everyone can learn from women in finance to make you a better investor.
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1. Avoid high-risk trends
Women, in general, don't take on as much risk as men when it comes to investing. A 2022 report from Wells Fargo found that women only take around 82% of the risk men take, yet they still earned higher risk-adjusted returns over time.
High-risk, high-reward investments can be tempting, but most of the time, they don't pay off. There will always be a small number of investors making millions from the hot new trend, but the vast majority of people will lose more than they gain with these types of investments.
While it may not be as exciting, a slow-but-steady approach is often more lucrative over the long run -- and considerably safer. Rather than seeking out investments that could make you a millionaire overnight, it's wise to stick to long-term stocks that are more likely to see consistent growth over the years.
2. Stay calm amid volatility
Research has also found that women are often less impulsive than men, which can lead to more investing success. During periods of volatility, only 8% of women pulled money from their retirement accounts, according to a 2022 survey from Nationwide, compared to 15% of men.
It's not easy to stay calm when the market is shaky, but it can save you a lot of money. When the market is down, stock prices are lower. If you pull your money out of the market in times like these, you may end up selling your investments for less than you paid for them -- potentially locking in substantial losses.
The best thing you can do during periods of volatility, then, is to simply ride out the storm. Eventually, the market will rebound. When you hold your investments through the downturns, your portfolio should eventually recover without you losing anything.
3. Consider a more passive approach
A common misconception is that the more active you are in the stock market, the more you'll earn. In reality, though, the opposite is often true -- a more passive approach can sometimes increase your earnings.
A study from the University of California, Berkeley found that men trade 45% more frequently than women, and all that trading reduced their returns by 2.65% per year (while women's trading reduced their returns by 1.72% per year).
One of the most effective ways to generate wealth in the stock market is to invest in quality stocks, then hold those stocks for as long as they remain good investments -- ideally several years, if not decades. It's not impossible to make money through short-term trading, but it's much riskier and often doesn't pay off.
Women may lack confidence in themselves as investors, but that's beginning to change as the gender-investing gap narrows. Research shows that if you want to make more money in the stock market, invest like a woman.
