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Why women are smarter investors
than men
SYDNEY - Women
make fewer mistakes than men when investing their
money, and are more likely to learn from errors,
an international money manager has found.
According to a survey conducted in the
United States by Merrill Lynch Investment Managers
(MLIM), only 35% of women have held a losing
investment for too long, compared to 47% of men.
Almost a quarter, or 24%, of men had bought a hot
stock without doing any research first, while a
mere 13% of female respondents had made such a
risky move. And among the men who reported buying
securities before looking into them, 63% admitted
that they had made the same mistake again, topping
the 47% of women who repeated their errors.
MLIM chief marketing officer Hannah Grove
said the patterns found in the US were also likely
to reflect the situation in other countries. "I
think we would see the same traits in the US,
Australia, England or in China, because these tend
to be more gender-specific than regional."
Despite making more financial mistakes
than women, men, however, derive more satisfaction
from playing the stock market. While 69% of male
respondents said they enjoyed choosing stocks,
only 55% of women felt the same way. Some 60% of
women prefer to spend as little time as possible
on managing their investments vis-a-vis 49% of
men. "One of the things that really struck me was
how dispassionate women are about investing and
the process of investing," Grove said. "Men tend
to be much more emotional about investing." The
survey found that greed, overconfidence and
impatience are investment characteristics more
common among men than women.
Because they
are more involved in their investments than women,
who see investments more as a chore, men are also
more knowledgeable about money matters. Only 43%
of women, for example, were able to identify
historical inflation rates, considerably fewer
than the 67% of men who were able to do so. Some
65% of the men knew what dollar-cost averaging
(investing the same amount in the same security at
regular intervals so that more shares are
purchased when the price is low and fewer shares
are purchased when the price is high) while 39% of
women did. Yet all this knowledge does men little
good.
Grove said women had a better track
record when it came to investing because they were
more willing to seek help from professional
advisers. "One of the things that really surprised
me is what good habits women have, even though
fundamentally their knowledge of investments is
very low and their interest very low," she said.
"With men it was a lot more of a gaming mentality,
in that they wanted to engage in investing and
compete to win ... whether that was owning a stock
that was going to triple or quadruple in value, or
beating some market index."
Merrill
Lynch's survey indicates women are not inclined to
take the time and are willing to pay for the
discipline. Men take the time but lack discipline,
and won't pay for it either. Approximately 70% of
women sought the help of financial investors,
while only 50% of male respondents made a similar
move. This is similar to another trait that men
often exhibit - reluctance to ask for directions
when lost. Women are more likely than men to have
a formal financial plan (77% vs 62%) and more
likely to have one person as their primary
financial adviser (70% vs 50%).
Men and
women share many of the same motivations for
wanting to be good at managing investments, but
where they differ is the degree to which they say
these motivations drive them. Both men and women
cite the desire to have a comfortable retirement
as their primary motivator. But more women than
men cite this (88% vs 78%). More women also cite
wanting to be financially independent (80% vs 67%)
and having money to spend on the things they want
(45% vs 37%) as "very important" motivators.
The numbers come from a telephone survey
of 1,000 people - 500 men and 500 women - with
household incomes of at least $75,000 and
investable assets of at least $75,000. The poll
was conducted between July 19 and August 9, 2004.
Participants had to be solely or jointly
responsible for financial and investment decisions
for their household.
(Asia Pulse) |
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