Girls just wanna have financial security -- Page
Women the smarter investors?
study, conducted for Merrill Lynch Investment Managers, puts
the best possible spin on women and investing: "Women make
fewer investment mistakes than men and make them less often -- despite
the fact that, on average, they tend to know less about investing
and enjoy investing less than men."
That's strange praise, meaning something like: Women are savvier,
but more ignorant than men.
Based on a telephone survey of 1,000 investors (divided equally
between the genders), the study is skewed to more affluent investors.
Respondents had annual household incomes of at least $75,000 and
assets of $75,000 or more.
Among its findings: "Women are far less likely
than men to hold a losing investment too long (35 percent of women
reported having done so at least once vs. 47 percent of men) or
wait too long to sell a winning investment (28 percent vs. 43 percent).
Men are also more likely than women to allocate too much to one
investment (32 percent vs. 23 percent), buy a hot investment without
doing any research (24 percent vs. 13 percent), and trade securities
too often (12 percent vs. 5 percent)."
On top of that, men are more likely than women to repeat their
OK, so men are foolish in some respects, but they enjoy the investing
process more than women (69 percent vs. 55 percent), and they don't
mind spending time at it. Most women, 60 percent, would like to
spend as little time as possible managing their investments, while
relatively fewer men -- 49 percent -- feel that way.
So what do these women do? They seek advice (read: they stop and
ask for directions), and that's what makes them "savvy investors."
That study also explores the role of human emotions
in investing. Survey respondents were asked to identify the emotions
that affected their investment mistakes. To a larger extent than
women, men cited greed (32 percent vs. 16 percent), overconfidence
(33 percent vs. 20 percent), and impatience (28 percent vs. 19 percent)
as emotions that interfered with their investment decisions.
What can we learn from these studies? Is there an underlying, biological
explanation for the differences in the way men and women invest?
Could hormones play a part? I have no doubt that too much testosterone
leads to overconfidence in investing, while not enough leads to
a lack of confidence.
All kidding aside, let's look at the sociological
perspective. Not to make excuses, but women traditionally find themselves
mind-numbingly busy due to the multiple demands of work, family
or both. At the end of the day, women drop from sheer exhaustion
after tending to everyone's needs before their own. I know I'm stereotyping
here, but these are documented facts! And a lot of us drop out of
the workforce for several years at a time to tend to our young ones,
setting us back even more. Retirement plans become a back-burner
concern, and that comes back to bite us.
The biggest bugaboo defeating us is that significant income disadvantage.
How can we even hope to beat men at the investment game when we
have a fraction of the resources to work with? If we earn 80 cents
on the dollar and save a smaller percentage of our wages than men,
we can't keep up with, much less supercede, men at that game. If
we earned as much money as men, that would help to level the playing
We can approach our bosses and demand to get equal pay for equal
work. That's what we should do -- at the time we're getting hired.
But no matter what our economic situation is and how we got there,
we must put the retirement plan issue before us, front and center.
Whether we seek the help of professionals or do it ourselves, we
must take steps to adequately prepare.
It's the only way we can face our golden years --
Longtime financial journalist Barbara
Mlotek Whelehan earned a certificate of specialization in financial
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