Women vs Men: Who's The Better Investor?

By drodriguez Apr 03, 2010

Hard proof may have just surfaced explaining why you should be the one in charge of the finances in your household. The mutual fund company, Vanguard, recently came out with some information showing women may be better investors than most men.

A recent article from New York Times talks about Vanguard's findings which dealt with the I.R.A.'s that 2.7 million people had with the company during the financial crisis in 2008 and 2009. What the company found was that men were much more likely than women to sell their shares off at stock market lows. Men who did this suffered huge losses and in effect missed out on of the market rally that started last year.

John Ameriks, head of Vanguard's Investment Counseling and Research, talks about how men's tendency to be overconfident can hurt them when investing in the stock market. Ameriks says, "There's been a lot of academic research suggesting that men think they know what they're doing, even when they really don't know what they're doing.

One reason why women may be better at men when it comes to investing is that women tend to be more risk-averse, often choosing fixed-income investments for their portfolios. Recent studies have also shown a relation between the male hormone, testosterone, and risk-taking.

Alexandra Bersanek, professor of economics at Colorado State University, explains the possibilities of why men are historically more risk takers than women. Bersanek says thduring the dawn of time risk-taking probably benefited men while trying to find a mate, and women probably shied away from risks in an attempt to protect their offspring. Today, especially during a financial crisis, risk-taking is not going to get most of us ahead. Bersanek warns men, "Excessive risk-taking has gotten all of us into a lot of trouble. That's certainly one of the lessons of the financial crisis."

What do you think of the research coming out that women may make better investors than men?

Are you better at investing money in your household? Why do you think this is?

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Comments

by VKathryn | San Diego, CA

May 07, 2010

I think that I have a much better grasp on the reality of the situation when it comes to my boyfriend and my finances. I think partially it comes from life experiences. He joined the Navy at 17, and thus has never had to worry excessively about job security etc. I, on the other hand, have taken the more difficult route. I didn't graduate high school, and instead earned my GED. I have lived through some tough times, including a year period where my amazing and generous friends allowed me to live rent-free. Without their generosity I don't know what would have happened, as I was making a very minimal amount each month, just enough to cover the cost of food, insurance, gas and my phone bill. As a result, I place big stock in having a big cushion of savings!

by basilandcatnip | GARLAND, TX

Apr 07, 2010

I think women get the short end of the stick because they don't always know the laws and the rules.

by pjclayton57 | Oceanport, NJ

Apr 06, 2010

I really think that it varies based on the person and their personalities, not on gender. I handle the finances for my household and I tend to be more conservative and play it safe rather than take great risks. I am not sure if that is always the right course to take but so far it has worked out well.

by BreezyBaby | Fort Morgan, CO

Apr 06, 2010

I believe that not everybody invests the same; but I will say that between my fianc�e and I, I am the better investor.

by girl17 | EAGAN, MN

Apr 04, 2010

I handle the day to day finances much better than my husband, but we've agreed to diversify on investing long term.

by Lusadi | Wasilla, AK

Apr 03, 2010

I'd like to see more of the statistics behind the study. One potential reason that more men were prone to sell is that there may be more men investing period. I have met many fine investors of both sexes. I think a good investor is anyone who takes the time to truly educate themselves about how the market works and examines their portfolio's carefully. I am better at investing money in my household. However, this is because I have taken the time to learn about investing and had several college courses on it.