Also, because mend take a more individualistic approach, they are more likely to discard information that conflicts with their own viewpoint, meaning they can be slower to drop losing investments.
Tom: Is there evidence to suggest that one set of tendencies is better than another?
Mellody: I wouldn’t say there is a winner here, but studies do suggest that the behavioral tendencies of women help their portfolios! A seven-year study by a professor at the University of California found that single female investors outperformed single men by 2.3%, that female investment groups trumped their male counterparts by 4.6%, and that overall, women as a group bested men by 1.4%.
One of the main reasons for this is that men make 45% more trades than women do. Other studies have found similar results, showing that women-owned or managed hedge funds outperform traditional benchmarks. In the six and a half years ending June 2013, the S&P 500 gained 4.2% and the HRFX global hedge fund index fell 1.1%. However, the Rothstein Kass women in alternative investments hedge fund index returned 6%.
Tom: Do you have some pointers that everyone can follow?
Mellody: Of course! I am not going to sign off without offering a couple of tips! The first thing to do is to recognize these tendencies. As they say, half the battle is admitting you have a problem. Regardless of whether you are a man or a woman, it is incredibly important to realize that individual investors fare much worse than investors who work with investment experts, so seek advice.
This is easier for women, so that means that all you guys out there are going to have to swallow your pride and ask for directions, so to speak.
My second tip? Be aware of the risk level that is appropriate for your financial goals at this point in your investment lifecycle. If you are a young, single woman, that can mean embracing more risk in your portfolio, as you are at the beginning of your financial life. It could also mean that, if you are in your 60s and male, you should reduce your exposure.
Finally, be active in your finances! Men: you have to do your homework. And our women listeners need to be more comfortable following the changes in your investments in the short and medium terms. If you do all these things, you will be on a much better financial footing.
Tom: Alright Mellody! Thanks for your help as always!
Money Mondays: Why Men And Women Invest Differently was originally published on blackamericaweb.com