Research by UK investment experts Hargreaves Lansdown earlier this year found that investments by their female customers had outperformed those by men by 0.81% over a three-year period.
If that trend continued over thirty years, Hargreaves calculated, the women’s savings pot would be 25% larger than the men’s!
Hargreaves found several reasons for women investors’ better results. There are three rules of thumb that any Irish investor can also benefit from.
1. More diverse investments
Hargreaves found that women are more likely than men to invest using investment funds. While 38% of men mostly invested via funds, 44% of women investors did.
As we’ve written here before, investing in funds gives you exposure to a far greater range of assets than investing in a single company, because the fund will in turn hold many underlying investments.
It’s a way of avoiding putting all your eggs in one basket.
2. Less speculation
Women are less likely to suffer large losses on ‘big bet’ investments.
Men were nearly twice as likely to invest in higher-risk speculative investments, such as small company shares, or those listed on alternative investment markets.
3. A long-term ‘buy-and-hold’ approach
A third factor driving women’s better investment results was the tendency to stick with their investments over time.
Excessive buying and selling of your investments can reduce your returns through trading and stamp duty fees, as well as leading to time out of the market – for example, missing on a bounce-back after a short-term fall in market prices.
It also reduces the compounding effect which can really help your investments grow.
Hargreaves reported that women investors were inclined to change their fund investments 67% less frequently than men.
Put it into practice
Male or female, an investing approach which favours diversity, placing no more than a small proportion of your investments into highly speculative assets, and focusing on the long term looks set to deliver more reliable returns.