When people are speaking of the world of finance and investing more often than not the people are usually referring to the men who work in the industry. It is a fact that only ten percent of the people who work in the career of investing are women. The rest of the population of this field is men. However this does not mean that the women who work as investors are not successful in this field. In fact it is just the opposite. Women are very successful as investors and there are many reasons why women make better investors than men.
Women Do Not Trade As Often As Men
When it comes to how often men trade when compared to women it has been discovered that women trade less frequently than men do. Women who are investors are likely to trade less to keep the course looking long term rather than short term. Men are more inclined to trade frequently maybe as a risk aversion strategy. Of course the downfall to trading more often are higher commissions and fees. This will put a damper on the amount of returns and might ruin the investment strategy.
Proven Financial Strategies
Often times when an investor is trading he or she is faced with some tough financial decisions that need to be made and made quickly. This is where the “failures of rationality” make and appearance many times make it hard to stick to your financial strategies that have been proven to work. This causes many missed opportunities as well as buying and selling too high and too low. It also causes what is known as action bias, which means trading too often. Women who invest are more likely to use the financial strategies that have been proven to work and by doing this will avoid the mistakes such as these.
Lower Risk Investments
There have been many studies done on how and why women invest better than men do. One of these studies found that a man finds himself to be a risk taker even when it comes to financial decisions. This is the reason why men often choose high-risk investments. They want to achieve a higher amount of returns. This happens even if they were following the proper financial principles on how to achieve the higher gains. In contrast to this women like to stay on a steady course. This allows for them to have a stable amount of returns.
Women Have More Self Control
Another thing that has been proven is that women have a greater need for self-control. Women tend to use this self-control as an investment strategy. It does not allow for them to go crazy and make irrational decisions. Of course this is linked to the financial satisfaction and the amount of wealth that women obtain.
Women Do Not Try To Time The Market
When women possess self-control when it comes to the market it helps them to make smart financial decisions. Self-control is a trait that will not allow for them to panic and act hastily when the market has a large swing. A man will try to time the market and this makes them more vulnerable to the market swings and puts them at a risk for low if any returns.
The market is a risk business for anybody who is an investor. It does not matter if you are a man or a woman. The good news is that as women you will be at less risk due to the fact that women tend to think things through more clearly and do not act on the spur of the moment. Either way men and women both have to be careful when investing.