The news is frequently filled with gender gaps – often in terms of how much employees are paid, from office workers to Hollywood actors, but also in other areas like educational attainment and crime statistics.
But are women better at making investment decisions than men? That was the question asked in a recent survey by Hargreaves Lansdown.
And the financial advisor claimed that women’s greater tendency to follow the rules might be paying off in terms of investment returns, as while men are more likely to invest, women have achieved greater yields – nearly 15% higher than their male counterparts in the second half of the 2010s.
HL suggested that this is because women are more likely to follow the “golden rules of investing”.
- Balancing high and low-risk investments
- Investing more of your disposable income
- Avoiding fees by making fewer trades in total
- Leaving portfolios untouched to make compound gains
- Adopting a long-term view of investing generally
In particular, the study found that men tend to buy into more high-risk investments and, although these can generate higher yields, they are also more likely to result in significant losses of more than 30%.
Should men invest more like women?
The data seems to show that adopting a more ‘female’ approach to investing could pay off for male investors – while women should not be put off by male counterparts’ tales of high-risk, high-yield investments.
Interestingly though, HL found men more likely to keep a larger portion of their savings as cash, rather than putting these into sensible, risk-balanced investments.
This might seem in opposition to the traditional stereotype of the all-in male investor, as well as contradicting the perception that women are more likely to put money aside in a cast-iron safe place for a rainy day.
Ways to maximise returns on investment
While the survey is an interesting look at the effect of gender on aggregate data, of course, every investor is an individual and your strategy is your own.
However, HL makes some suggestions as to how you can maximise yields through some simple approaches to the way you invest.
For example, they suggest you avoid buying small quantities of many similar stocks – for example, a number of shares in multiple petrochemical brands – when you could buy a larger stake in just one or two, with similar performance for fewer transaction fees.
The level of fees you pay can also be reduced if you resist the urge to micromanage your portfolio.
Naturally, transaction fees depend on the number of transactions you make – so hold on to your stocks for longer, and you can avoid eroding their real-terms value by clocking up those unnecessary costs.
And this also leads to HL’s other suggestions, which call for a long-term approach to investing.
Why invest for longer?
There are a few good reasons why it’s a sensible idea to hold on to your investments for longer, and it’s not just about transaction fees.
Like it or not, the stock market is volatile. On any given day, some prices fall and others rise, and it’s impossible to predict with 100% accuracy which stocks will come out on top.
However, over the long term, it is much more possible to anticipate an increase in value in certain brands, sectors or national economies.
Whether you buy based on historic performance, ethical or environmental concerns, or a focus on a high-growth emerging market, putting your money in one place that is on the up overall is much more likely to yield positive returns.
And finally, having a presence in the market means you’re less likely to miss out on those rare occasions when stock prices skyrocket across the board.
Although these days are relatively few and far between, they can take portfolio values up significantly in a very short period of time.
So whether your investment profile matches the stereotypically male or female, or somewhere in between, you could find it pays to put some of your savings into relatively reliable stocks, in anticipation of a spike in share prices at some point in the future.
Disclaimer: The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.