Sex and Investing : The Difference Between Male and Female Investment Strategies
Does the sex of someone really play that crucial of a role in the way they invest? A recent study conducted by Merrill Lynch polled over 1,000 U.S. investors (500 men and 500 women) get a better understanding of their investment thought process, including their mistakes, attitudes, beliefs and knowledge levels. Is sex something you should really take into consideration before choosing a financial advisor?
The results of the study might surprise you. It turns out there is a significant difference in each of the categories listed above when it came to how women investors thought about the problem as compared to how male investors thought about the problem.
The study concluded that male investors, as with many other things in life, choose to take more risks. This extensive risk taking attitude also leads men to make more mistakes overall.
Women were far less likely then men to hold a losing investment too long (12% less) or wait to sell a winning investment (25% less). Men are also more likely to allocate too much to one investment, buy without having doing adequate research and trade securities too often.
This cautious attitude displayed by women is also reflected in what they considered to be their most painful mistake. They thought their worst mistake was not starting to invest early enough. Other findings of the study included a significantly greater percentage of women (47%) than men (30%) report not being knowledgeable about investing and women are also much more likely to have a formal financial plan in place (77% vs. 62%).
Of course this data is not reflective of all investors and genders, but it is something to consider when looking for a financial advisor and trying to match one to your risk tolerance level. Happy Investing :-)