Are Women Better at Investing?

By Heather Taylor1 Comments


Are investments better off in a woman’s hands? According to a new article, that might be the case. An article in Fast Company uses science to back up a claim that women are better equipped for investing.

The article quotes the author of the book, Warren Buffett Invests Like a Girl--And Why You Should, Too, which takes the position that a woman’s lack of testosterone might be a benefit. Where testosterone tends do lead to quicker deals and more risk-taking, women tend to have a calmer, more thought-out approach.

Women are more likely than men to invest in what they know, the article adds. This can be a benefit in self-directed investing, which allows the investor to use his or her IRA to invest in things beyond stocks and bonds. For example, someone who is active in the real estate industry can use his or her IRA to invest in properties.

Other reasons cited for women’s superiority in the investing world are that they band together, and that they do their due diligence:

A 2008 study from the University of California, Santa Barbara, found that men who feel they are being observed and judged by their peers--other men--tend to make riskier choices in order to assert their dominance. Women, on the other hand, didn’t have this reaction, and tend to bring more consistent decision-making patterns to all situations.

The article also cites research that women make 70 to 80 percent of household purchase decisions, so they’ve been the target of marketing campaigns for a long time, making them better able to detect true value in a prospective purchase.  

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