Do women invest differently?

Throughout the economy there remains a frustrating gender pay gap, as well as a disparity in the number of senior business positions that are occupied by men rather than women. But when it comes to personal wealth, women are catching up.

According to the Boston Consulting Group, the level of private wealth held by women increased by $17 trillion between 2010 and 2015. That may be due to a number of factors, including the (too) gradual closing of the gender pay gap and the fact that inheritance practices have become more equal over the years. The result of this increase in wealth is that more women are investing. Which raises an interesting question: do women invest differently to men?

There is minimal scientific evidence out there, although an interesting study by the University of California found that women investors outperformed men by around one percentage point annually, largely because men were more likely to be overconfident and make impulsive decisions.

As well as the evidence that men are more likely to be impulsive, surveys suggest that male investors are also more prone to treating investing as an end rather than a means. For many male investors, outperforming the market is the measure of success, while women investors are more likely to see investing as a means to an end; that is, to put aside enough money for a house or for retirement.

Related to this difference between men and women is the evidence that more women than men actively look for investment opportunities with businesses that have a sustainable or social purpose. In fact, a survey by UBS found that 88 per cent of women would like to invest in companies and other organizations that are focused on promoting social well-being.

This in turn is related to another significant difference between the sexes when it comes to investment. A survey by HSBC found that only 13 per cent of men spent more than one month in researching an investment opportunity, while the figure for women was 17 per cent. They are likely to look around and check out advice including the best broker tips from LearnCFDs, before taking the plunge on any investment.

Of course, to what extent these differences are genetic, and to what extent the result of the often-divergent upbringing that Australian men and women go through isn’t clear and is beyond the scope of this article. There are, no doubt, plenty of reckless women investors and many male investors who don’t conform to the stereotype of the macho trader.

But there are lessons to be learned here for all investors. If, on average, women do more research, treat investing as a means to an end, and as a result, make more profit, then this suggests that the more cautious, responsible approach is the more successful way to go. As with all aspects of life, opening up the world of investment to divergent ways of doing business increases understanding and shows us a more rounded, sustainable approach.