Our canyon investor image may be striped, equipped with testosterone and covered with a ruthless risk taker. However, those who have the ability to persuade more women face the threat of superiority.
One of the largest investment activities at the University of California in 2001 showed that men traded 45% more than women. However, their average risk-adjusted income was less than 1.4%. Another large survey by DigitalLook found that women’s portfolios were 3% higher than the FTSE in the year ended July 31, 2004, while men were 1% behind.
Since then, the evidence of women’s dominance in the investment markets has been growing. Now psychologists can determine the character traits that make up a winning investor. They also characterize these features, which explains why more men count their losses in the markets.
What are the characteristics that put one on top of the other? Women’s better investment performance may be due to the following:
- Be more careful
Women’s portfolios are more balanced and diverse. They also make less risky, less fashionable choices.
- It is less competitive
Women invest less in something than they do. They are less motivated to prove their financial abilities to others or to be excited.
- More appropriate
Women have been shown to support a less volatile portfolio than men. They are also better at managing ‘information’ that others may overreact and managing market fluctuations.
- More patient
They do less stock jumping, trade less, and invest longer. According to research by Barber and Odean (2000) and Carhart (1997), most traders earn the lowest income. This is true for both individuals and mutual funds.
- Better researchers
In general, although women are less experienced investors than men, they will investigate better and be less swayed in the herd.
Of course, these aspects of the female psyche make women more conservative investors than men. Thus, men cannot take (or do much harm) the stratospheric gains they make. However, over time, women’s net income is higher by investing in good funds. And isn’t that what counts in the end?
Of course, many men have what it takes to make them a first-rate investor. However, their earning characteristics may not be as common as those of men. Indeed, the best male investors can connect with the female side more than we think.
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What else causes a win-lose split outside of estrogen deficiency and fewer handbags? When it comes to making the smartest investment decisions, there are three main psychological characteristics that can make men stand up every time.
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- Attitude to risk
Men are less risky than women and will return portfolios that are more uncertain. Instead of choosing a more reliable, different portfolio, you are more likely to put all your eggs in one basket. Higher earnings and higher net worth make it easier for men to take more risks than women. A 1994 study by Wang in the United States found that women were offered a safer option by counselors who expected them to be more risky than men.
Studies show that excessive self-confidence is more in men than in women. And this is especially true in arenas dominated by men, such as finances. They value the return on their investment and the accuracy of the return. They also overestimate the value of their knowledge and overestimate their abilities. In a Gallup survey, both men and women expected their portfolios to outperform the market, while men outperformed their markets.
- Herd instinct
Constant monitoring of the market can increase men’s over-activity and cause them to act irrationally. Men are more involved in financial leader games and information cascades. Instead of managing endless news flows and financial information and sticking to an annual portfolio review, there are also the pitfalls of being too informed.
Although women are more likely to have the innate skills that will bring them the best income, there are still a few games with a sense of regret. Male investors are more than one in eight women, and only 3% of hedge funds are managed by one woman. Simonne Gnessen, owner of Wise Monkey Financial Coaching and a predominantly female client, says women can do so by borrowing heavily from this man. “A lot of women have exactly what it takes to reach dizzying financial heights,” she explained, “The only thing that keeps them going is knowing and acting on what they have.”