Patience is a virtue. When it comes to investing, that's why women often do better than men.
My household is filled with girls. When raising them, my husband and I always tell them that their gender does not limit them. They can do anything they choose; that means playing softball and soccer, dancing, shoveling in the winter and landscaping in the spring. If you still think doing something "like a girl" is a bad thing, watch this latest ad by Always.
The spot, by feminine products maker Always, shows how young females at puberty are too often convinced that they do things, whether running or throwing or hitting, in a weak and ineffective way. That judgment, the ad argues, is dead wrong.
As more women achieve higher positions in the work place, gone are the days that only one spouse makes the financial decisions. Still, many women feel they are not treated equally. According to a 2010 study by Boston Consulting Group, women participants complained that they received dumbed-down financial services because of their gender.
Indeed, women tend to be much less confident than men about investing, but when they do invest, they achieve better results, thanks to biology and psychology.
Studies of gender differences in investment behavior show that women outperform men in investing because they are more patient investors. They commit to their investments. Instead of trying to chase the market, women tend to invest with a "buy and hold" strategy, allowing them to reap the benefits of staying the course with their financial plan. In the long term, women are often more successful.
A study by Vanguard, the mutual fund company, found that during the 2008 financial crisis, men were 10% more likely than women to sell stocks at market lows. A University of California study found that female investors beat men by 1.4 percentage points because women trade less often.
"The way women tend to approach investing is healthier and calmer," LouAnn Lofton, author of Warren Buffet Invests Like a Girl - And Why You Should, Too, writes. "Testosterone can help traders take risks and move fast, making loads of money in the meantime. But too much testosterone for too long can encourage too much risk taking."
Women also tend to plan for a bigger picture. A recent Charles Schwab study, "Women and Financial Independence," found that 88% of the surveyed women want advisors to consider their complete financial situation, not just their investment portfolio.
Behavior is a key component to having a successful financial plan. So instead of focusing on the differences between how men and women invest, why not learn from each other the good investment behaviors that lead to achieving long-term goals. Investing "like a girl" can be an advantage.
