When it comes to investing and planning the financial future for themselves and their family, women have been found to be less confident than men. That explains why women are rarely found among the top investors. But that does not necessarily make them bad investors. A study conducted by Fidelity Investments in 2013 revealed that in a 10-year period, women attained similar return rates as their male counterparts.
Confidence Lacking Though Skill Is Evident
It’s the lack of confidence that keeps them from making big investments. They are more averse to risk, which is why they keep deferring to their husbands for making serious investment decisions. This aversion to risk also makes them more practical though, in some ways. The lack of overconfidence, contrary to men, makes women focus more on diversified and long-term investments. Men, on the other hand, are less risk averse and persevere to beat the market, trading away gains made in investment and incurring more risk.
Not only did women achieve similar rate of return as men, they also proved to be better at saving, the research indicated. While women only earned two-thirds of male investors, they managed to save 8.3% of their earnings as opposed to the 7.9% the men were able to save. While women were focused on the overall financial situation, men were focusing too much on investment returns. This shows women are good at it. It’s just that they need more confidence, and a lack of it can seriously affect investing performance. While overconfidence can wreak havoc to a sensible financial strategy, lack of confidence can let opportunities for earning big slip away.
Playing It Safe
The research revealed that the men tried to beat the market by selling low during troubled times and re-entering the market when prices rise again. This strategy results in high risk many times. Beating the market isn’t fully possible. Women, though, did not get swayed by market highs and dips. They were constant, and as a result they did not incur unnecessary risk.
For women, or men for that matter, confidence can only come with experience and getting the basics right. That’s where online broker dealers such as TradeZero can help, providing you with in-depth information and resources for understanding the market and the various investment options on offer, and initiating you into the world of online trading. Women can get smarter if they only secure greater confidence. They can develop their own strategies rather than copying the investment methods of men.
Call TradeZero at 954-944-3885! We are here to help and get you started.
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