The world of investing has traditionally always been a male affair. Until recently, women broadly stayed away from investment. There were and are exceptions, of course, but those exceptions prove the rule.
According to figures from the British Morningstar, there are still only 10 to 14% female professional investors. A similar figure is common for private individuals. In the Netherlands, too, female investors are strongly in the minority. In recent years, however, that has begun to change. More and more women are starting to invest. The idea of financial independence by making your money work for you is clearly catching on.
The historically low return on savings accounts has undoubtedly played a major role in this, as has the fact that women in general are starting to earn more and more and more often have to think about what they are going to do with their money. And guess what? Women generally achieve higher returns than men when we look at the average of their entire investment career.
But how come? Why do women generally achieve a higher average return than their male colleagues? There are a number of good reasons for this, which we take a closer look at in this article.
Where men often throw themselves into the stock market, women start a little more cautiously. Their ego is less in the way and they first thoroughly research the different investment methods, strategies, investment instruments, and so on. Successful investing does indeed require some knowledge and preparation. And certainly if you want to invest in more complicated things such as shares, futures and cryptocurrency.
Women are much more inclined than men to first read up on most topics, go through all the options, compare different brokers (by reading a Binance or Bitvavo review, for example) and listen to the advice of others.
Men all too often think they can do it themselves, when statistically this is not the case. Women are also better able to admit they don't know something. As a result, they listen more often to the advice of experts, resulting in better results in their investments.
If you look at what you can invest in, you've been busy for a while. After all, there are so many options, and new ones are added regularly.
Men tend to jump on the latest hot trend much more than women, which of course comes with pros and cons. For example, a certain crypto currency can rise sharply in value, so that investing in it appears to be a good idea, but for the same money it can fall sharply in value.
Women are more likely to invest in conservative businesses, such as index funds. These do not yield the most return (usually 8 to 10% per year), but are a good option to make a profit in the long term.
Female investors are also more likely to spread their investments so that they are better covered in the event of a crash. Diversifying your investment portfolio is usually a good idea as an amateur investor. This means that your entire assets are not in one specific investment instrument. If that were to suddenly fall in value, you would make a lot of loss. If, on the other hand, you have spread your investments well, you minimize that loss much more.
A chart of a traditionally male investment portfolio is more likely to show strong peaks and troughs, while a female's is more steady. At the end of the day, the women's chart often ends up slightly higher.
Women are also more likely to invest in the long term. If you invest in the short term, you are much more subject to the fluctuations of the markets. You end up in bear and bull markets, with the occasional crisis. This puts you at a much higher risk of losing a lot of money. In the long run, on the other hand, the market will consistently increase in value and you are almost guaranteed a profit.
The last factor is perhaps the most unexpected, as women are often labeled as emo, as opposed to the “rational men”. In investing, it turns out that the reverse is true. Men are more likely to panic when their investments fall in value, and then sell more quickly at a loss. Or they jump faster on a new and exciting investment.
Women, on the other hand, take a more calm and reasoned course. They often draw up an investment plan, which they stick to. If the market suddenly drops, women generally last longer. They don't sell their investments because they realize that the market will inevitably recover in the long run. After all, emotional investing is a recipe for investment failure.
Men more often try to beat the market by capitalizing on price changes, but that never works out well in the long run. Simply following the market by investing in broad index funds will yield superior returns in almost all cases, which is what women are more likely to do.
The more you allow yourself to be influenced by the ins and outs of the market, the less profit you will have in the long run. Keeping cool and calm and sticking to your investment plan regardless of the situation is the best way to become financially prosperous from investing. Women have a clear advantage here.
Although women are currently still a minority among investors in the Netherlands, there has been a clear trend in recent years:women (especially millennials) are not only discovering the benefits of investing, but they are also good at it. In general, they are even better than male investors and are a lot more financially responsible.
This is mainly because women are better informed, invest more conservatively and safely, and react less emotionally to changes in the markets.
