SALT LAKE CITY — Investing Insights
If you’re feeling uneasy about the stock market—between inflation, rising oil prices, and the stronghold of major tech firms—you might want to rethink your approach. Perhaps, consider adopting a female perspective on investing.
A recent study from Fidelity revealed that women have outperformed men by 0.4 percentage points over a decade. While this may seem small, the difference becomes significant, as investing $1 million at a 7.4% return for 25 years yields approximately $500,000 more than at 7%.
Matt Close, a lecturer at the University of Westminster who oversees the DA Davidson Student Investment Program Fund, notes distinct differences in investing behaviors between genders. According to him, women often conduct extensive research but tend to exhibit less confidence.
He pointed out that overconfidence can be detrimental in investing. “It often leads to excessive trading, which incurs taxes and fees,” Close explained. Those with inflated confidence might gravitate towards riskier stocks.
“Women generally have a better understanding of the risks involved,” he stated. This was evident in a discussion with students, including Macy Edwards, who expressed concern about the student investment fund’s 36% stake in Alphabet, Google’s parent company.
This heavy investment made both women uneasy. Edwards remarked, “It has downside risks.” In response, the pair suggested diversifying the portfolio by investing in two healthcare companies.
Student Roman Frost noted, “Men are usually more willing to take risks, while women’s choices are more fact-driven and less influenced by emotion or the allure of high returns.”
During a series of talks in the Maybin area, financial planner Tracy Dean discussed how women often remain resolute during market fluctuations. “In the 2008 stock market crash, we didn’t panic. We held on, and by 2009, we saw a recovery. It took a decade or so, but we didn’t forfeit our profits,” she shared.
A study from the National Retirement Institute showed that during the economic downturn in 2008, 8% of female investors withdrew from their retirement accounts, compared with 15% of males. “Men typically seek to chase profits,” Dean noted. “I have these discussions all the time; they tend to be more aggressive, focusing on returns, but often overlook their losses.”
Dean highlighted that recovering from a 50% loss requires achieving a 100% return. Veteran investor Matt Kraus admitted to battling overconfidence as well: “After making a successful trade, it feels exhilarating. Yet, I remind myself not to get overconfident, as that can lead to humbling experiences.”
Dean’s advice is straightforward: “In one word—plan. Stick to that plan, and only deviate when absolutely necessary.”
Essentially, invest like a woman.
