Are women better investors than men?

Recent studies show that although women are less likely to invest than men, when they do, they tend to be more successful.

So why is this? Let’s take a look. 

Research from Fidelity Investments has found that women outperform men by approximately 0.4% every year.

The findings were supported by research from Warwick Business School, which saw men fall behind their female investor counterparts by an average of 1.8% over a three-year period.

Hargreaves Landsdown, too, found that women returned 0.81% more than men over a three-year period in its study on the subject.  

With numerous findings pointing to women being better investors, it’s worth asking: Why is this the case? What are women doing right that men are doing wrong? And what can men learn from women with their investing techniques?

There is no silver bullet to being a successful investor. It is through a combination of behaviours that women are statistically better at investing.

Let’s examine some of them and how they relate to the results of some of these studies.  

Do female investors opt for quality over quantity? 

Not only are there fewer female investors than men, but women who do invest tend to trade at a lower frequency.

The study from Warwick Business School found while men trade 13 times per year on average, the number for women was just nine. Meanwhile, Hargreaves Lansdown’s research saw women trading shares 49% less frequently than men.  

What does this tell us about the way women invest in comparison to men?

It suggests they are more focused on the bigger picture, giving their shares more chance to grow. Holding onto shares is a proven way of growing wealth over the long term.

The Standard & Poor's 500 index saw annual losses in just 11 of the 47 years between 1975 and 2022, underpinning the theory that, more often than not, stocks will generate returns. 

Holding onto stocks rather than trading can also be cheaper as you’ll pay less in transaction fees.

So, rather than investing and trading with overconfidence or for the thrill, women take more time in deciding where they want to put their money.

And once they make their move, they will likely stick to it over the long term.

Do women tend to take fewer risks in their investments?

Numerous studies have shown that men take bigger risks than women, which applies to their investing preferences.

A survey from BlackRock found that 72% of women rejected investments in riskier equities, while just 59% of men did.

Learn more: Vanguard vs Blackrock

Of course, women aren’t always living by the tortoise-and-hare mantra. However, by pursuing less risky investments and taking a long-term approach, it is evident there is a winning formula. 

Women may be more likely to construct rounded portfolios that spread investment risk.

Diversification is a great way of riding out market volatility. Fidelity’s study found women created more balanced and diverse portfolios than men, who often opted to weigh their portfolios in riskier assets.

How are education and external input key to investing? 

It’s not by chance that women are more successful investors than men.

Their behaviour is not inherent as it is often learned, either through education or by seeking external advice.  

Research from Boring Money found that just 32% of women rated their confidence in choosing an investment account as six or more out of 10.

What does this mean? That they are more likely to undertake research before beginning their investment journey.

Men, meanwhile, may feel confident enough that they can make the call on their investment choices with little knowledge.

If the figures on men and women’s investing success are anything to go by, it appears failing to do your due diligence can be costly.  

Men are also less likely to take investment advice from experts.

Betterment found among its clients who deviated from its asset allocation advice, men were more likely to take on more risk and moved into a 100% stock allocation twice as often as women.  

What does the future look like for female investors? 

There are all sorts of reasons why women don’t invest as much as men.

Research shows they are more financially vulnerable and have less confidence when managing money.

Whether women need different financial advice to men is another question, but according to research, the future looks positive for female investors.  

They need only take a look at the comparison between male and female investors to feel more confident in their approach to investing.  

Perhaps the most crucial aspect of the research women should take note of is that female investors seem to have more of an eye on the long term, and this is of huge benefit to their chances of success.

With this in mind, it’s important to take action now to give yourself the best opportunity of long-term investment success.

The alternative is to keep waiting and give yourself a shorter amount of time to grow your assets.  

While saving within a pension has its tax advantages, there is a gender pension gap that is concerning for women.

To combat this, women can increase their pension contributions, while also seeking out risk-averse investment opportunities that will offer an additional source of income in the long term. 

Get expert financial advice 

The evidence suggests that women’s more measured, research-driven, and long-term approach to investing is paying off.

By prioritising quality over quantity, embracing diversification, and making informed choices, female investors are proving that patience and prudence can lead to better outcomes.

Whether you're a man or a woman, these insights offer valuable lessons: investing isn’t about making quick gains but about cultivating a strategy that balances risk and growth over time.

If you're looking to refine your investment approach and boost your confidence in the market, seeking professional financial advice could provide the guidance you need.

Let Unbiased match you with a financial adviser for expert financial advice on building a diversified investment portfolio, minimising risks, and planning for long-term financial growth.