Just sharing some interesting statistics about men and women and their general attitude towards investing. The image below is supposedly based on Sharebuilder’s 2007 “Women and Investing Survey” as reported by Seattle Post-Intelligencer (I tried to search for the original survey on Sharebuilder’s website but could not find this particular (2007) version).
It appears from the survey that more men are “confident” and “optimistic” about investing than women.
Similar findings were published in a Sharebuilder survey last year in which it was reported that, in general, only 35% of women surveyed trust themselves to make good investing decisions; whereas 50% of the men were in that category. Here is some data from that presentation (link to PowerPoint file):
Again, it’s clear that more men consider themselves to be “knowledgeable” and “confident” with their investments than women.
Based on these facts, one might quickly jump to the conclusion that men perform better with all their confidence and optimism. However, if you are thinking along those lines, here are some interesting remarks in the same presentation:
- Men tend to embrace investing with gusto. They are self-confident (perhaps to a fault), prefer to engage in the activity frequently and get enjoyment from it.
- Young men are the most cocky.
- They [women] don’t want or need a pitch of immediate riches through the latest big score or hot stock, nor are they much interested in having to fret over their investments every hour of the day. They are practical and want to invest that way.
This is nicely complemented by findings from some older surveys which state that (source):
- “Men tend to be overconfident about their ability to pick stocks that can beat the market,”
- A study of more than 35,000 discount-brokerage customers by economists at the University of California at Davis found that between 1991 and 1997, women’s portfolios earned, on average, 1.4 percentage points more a year than men’s.
- Records of investment clubs reveal an even wider performance gap: Through the end of 1998, all-female clubs had an average compounded lifetime return of 23.8 percent a year, compared with just 19.2 percent for all-male clubs, according to the National Association of Investors Corp., which represents about 37,000 clubs nationwide.
Considering all the characteristics, it is safe to conclude that women, with all their fear and risk averse behavior, are more efficient when it comes to investing - they aren’t spending as much time as men in tracking (and boasting about) their investments and yet they are getting higher returns.
In fact, even if you forget about efficiency for a while, investing is all about getting good returns - and women are ahead in that game.
There are some subtle lessons here for us, my fellow gentlemen. 
Updated: Link to the UC Davis study - thanks to TFB @ The Finance Buff.
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I’m not at all moved by this. *Of course* women outperform men in the investment arena; they have to fund their spending somehow. (All smiles, ladies.)
Here’s a link to the UC Davis study mentioned in the post. The title of the study says it all.
Boys will be Boys: Gender, Overconfidence, and Common Stock Investment
http://faculty.haas.berkeley.edu/odean/papers/gender/gender.html
Steve, your a funny one~
Great post very informational.
I will take it into my own considerations.
Thank you.
Men are more confident when it comes to investing their money because they are more likely to have a steady income for much longer periods of time.
Woman have to worry about becoming pregnant, caring for children, caring for aging parents, getting divorced when the man was the main breadwinner, not getting a raise or promotion because a man was chosen instead. We hold back because we are never sure of the future ahead.
But times are changing so hopefully those numbers will be even one day..
Interesting post. However research reveals that women make better and more successful investors than men. I make a post on this subject sometime back.
Take care and cheers.
A great reminder that the financial world is obviously dominated by Men. I love being a man! j/k!
Seriously, the history of financial systems and definitions have been dominated by male-centric masses. Perhaps in due time a state of equalization will be reached been males and females (on a global basis). But for now, it’s the old boys club that will continue to rule our dollars and sense.
Steve: “they have to fund their spending somehow” - obviously, you are either not married, or your wife doesn’t know about the comments you leave on blogs.
TFB: Thanks for the link, it’s a very interesting report.
Family Savings: Yeah, I can understand why women might be hesitant about the future - that probably explains why women are more worried about their post-retirement life than men - some of the surveys linked in the post have highlighted that fact.
But, in spite of their hesitation, they are doing better than men as far as getting returns for their money is concerned. That deserves some thought.
Robin: “However research reveals that women make better and more successful investors than men” - well, that is exactly the point I am trying to make with this post; I was probably not very forthcoming in the conclusions.
Lem: Yeah, it’s male dominated (or should I say “male ego dominated”) area.
Again, although men claim to be “confident” in their investing strategies and dominate the investing world, it’s not showing up where it matters the most - the returns.
(Male) confidence is important in the world (notably the battlefield), but in investing (female) patience and prudence is what wins the long-range money. Don’t mean to paint the canvas with only two colors, but there is a good amount of truth to even the broadest generalizations.
By the way, I think Ben Graham was a woman. Thankfully Warren Buffett is too, because it means he’ll both outlive his male counterparts and can well afford to do so.
A very good reason to be in full accord with Wifey when setting up investment plans. She will likely be able to tell in an instant that your “can’t miss” investment idea is going to cost you a bundle - listen to her. Her risk sense is better developed, women’s intuition is real, and a scared, disconcerted wife is not what a man should aspire to produce.
As a team, in agreement, with shared goals, continuous communication, respect for fears and concerns, a man and wife can produce astounding results. Unfortunately, the male tendency to think he’s got a bigger, better, idea all too often wins out, causing the mother of the children to picture herself and the children in line at the soup kitchen.
Actually, watching investments too closely adversely affects performance on average because we let our emotions get into the mix.
I would like to join those investment club though since 19.2 and 23.8 percent on average is almost too good to be true!
As a woman who learned to invest on her own, I think that in general, money matters have traditionally been the domain of men. Tradition and gender roles change, thankfully,and as more women learn to handle their family’s finances, practicality will prevail.
I have managed and invested our family’s money from the get-go, mostly because my hubby simply wasn’t interested. By age 40, I had invested our money well enough that I was able to tell my husband that we no longer needed to work.
Very few people in our lives know that we are millionaires. They are puzzled about how / why we don’t work anymore. Why don’t our friends know? It’s because I rarely boasted about my latest hot stock picks or portfolio performance.
Until just recently, that is, when I decided to educate and empower other women to achieve their own financial freedom, by starting a personal finance blog of my own.
Undeniably, there are gender differences. But I think the biggest difference here is gender role traditions, expectations, exposure, and role models.
Ya i totally agree with this post that always invest like a women, some fear and proper research is must for any type of investment.
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