Why women invest differently?

A interesting quote I have read today morning on a blog “Men buy shares on Mars and women have a savings account on Venus"

Men are from Mars, women are from Venus, but we all invest on Earth. Gone are the days when men controlled the finances and women raised the children. Today both genders have equal say in major household decisions, including financial planning and investing. However, there is still a large degree of parity of investment styles between men and women.

Women tend to be calculative than men.

Women hate taking risks. They like to analyse things well in advance, before planning their money. Even some biological evidence suggests that testosterone levels play a significant role in determining risk-taking ability. Basically, men are biologically designed to be better risk-takers, while women, for obvious reasons, tend to be more calculative. Being calculative comes naturally to women as they usually tend to be the household managers and establishing a perfect work-life balance is what they do best. This quality reflects in the way they manage their finances as well. Blame the hormones, but that’s how men and women function differently on the financial front.

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Investment Horizon

By nature, women tend to focus on the future and what’s down the road; whether that’s in relationships or money. Research has even shown that females behave in a way that better suits long term investing. This consists of constructing a well thought investment strategy and sticking to it, even though its ups and downs.

Their male counterparts, on the other hand, are more likely to track short term fluctuations and abandon ship at the slightest sign of market volatility. This occurs throughout all types of investing, even retirement planning which is typically a long term endeavor. It is estimated that men tinker with their portfolio 50% more than women.

Generally speaking, women are more patient and allow their investments to grow. This is important because frequently trading and acting on short term fluctuations cultivate negative outcomes. In this regard, men could borrow a page from women.

Women tend to be more goal-oriented

According to a survey women were found to be better at saving as compared to men. The survey also showed that to most women, money is synonymous with freedom and while managing both the household and work, women have got a better knack for saving. More and more urban women are exploring various investment options like Mutual Funds, Gold ETFs, etc. and that’s helping them invest their hard-earned money better than before.

Final Take

As we now know, women are more thoughtful and risk averse when it comes to investing while men are thrill seekers with a quick trigger. Even though financial services are dominated by men, women have the edge over their counterparts. The more conservative approach women take has been found to generate median returns of 5.3%, while males earn just under 5%.Economic research has found that a passive strategy habitually outperforms an active one in the long run, so it makes sense that men are 25% more likely to lose money in the market. That said, men have greater upside potential since higher risk typically means higher returns. Gold