Many studies indicate that women have after all a slight edge in investing. In this article, we will look at what the data says and why women may have a slight lead in investing. Is it a myth or a reality from which male investors can also learn?

What does the data say?

If we look at the results of several studies, we find that many of them have come to similar conclusions.

Researchers at Warwick Business School in 2018 tracked the behaviour of 2,800 investors on the British platform Barclays over three years. The result? Women achieved, on average, annual returns of up to 1.8% higher than men.

A similar trend is confirmed by other studies. The American company Fidelity analysed millions of accounts and found that women had approximately 0.4% higher annual returns. Similarly, the British platform Hargreaves Lansdown examined a sample of its clients, and the result was a difference of 0.8%, again in favour of women. It was also shown that women significantly less often faced losses exceeding -30%.

Although the numbers vary slightly in individual studies, most studies agree that women have slightly better results than men. This may sound like a negligible percentage, but with long-term investing, it can easily cause differences of thousands (or even tens of thousands) in final wealth.

Why are women more successful in investing?

Many studies agree that women have a lead in investing. But what exactly do they do differently? Several explanations come into play here:

1. Caution and less tendency towards overconfidence

Women usually take less risk and are generally more cautious, and this also applies to investment selection. They don't tend to be overly confident and are less inclined to engage in speculative trading, which helps them avoid large losses.

Of course, excessive risk aversion is not entirely healthy for investing either. Riskier assets (such as stocks) generally bring higher long-term returns than less risky ones (bonds). If you avoided stocks due to fear of risk, it would be more of an obstacle to building wealth. However, the problem is often excessive self-confidence that you can outsmart other market players and get rich at an above-average speed. And men succumb to this error more often.

2. Patience and a long-term horizon

Studies prove that women more often approach investing with greater patience and invest for a long time – for example, for retirement or for family and children.

Men have a greater tendency to "play" with the portfolio. However, fewer impulsive decisions and interventions in the portfolio save you not only a lot of fees but also bad decisions under pressure or emotions. The Barber & Odean study from the USA suggested that men intervene in the portfolio and trade up to 45% more often than women, but it costs them a loss of approximately 1% of returns. Women, on the other hand, more often invest regularly and long-term. They thus leave their investments to work quietly. This proves to be a more effective strategy, which is also much simpler and more carefree.

3. More sensible diversification

Data from British platforms show that women more often invest in diversified funds or indices and are less likely to engage in risky bets on individual stocks. In contrast, men more often take risks, often with the prospect of "getting rich quick," but the reality is usually the opposite.

Everyone can adopt healthy habits

Although statistics generally favour women, this predominance is not a fixed rule but rather a reflection of social and psychological differences and approaches to finance.

The good news is that these successful investment habits, such as diversification, regular and long-term investing, and less frequent portfolio intervention, can be adopted by anyone regardless of gender. Moreover, a patient and long-term approach most closely approximates the ideal of passive investing, which is often recommended as the key to long-term success.

Let's also not forget that there are slightly fewer women than men in investing, and thus the average may be slightly distorted by the fact that women who are better informed and prepared are more likely to start investing. However, this does not change the fact that each of us can be inspired by those who invest wisely, without unnecessary emotions, and with a long-term plan.

Finax is one of the options for starting this kind of diversified, tax-advantaged, and carefree investing in ETFs. Opening an account will not take you more than 10 minutes, and you can start with as little as 10 euros per month. You don't have to be afraid of it, even if you are complete beginners. Finax will solve everything for you; you will just relax and watch your money work for you.

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