PHILADELPHIA (CBS) — The recent stock market downturn affected many Americans, some more than others. But it seems that even in a bad economy, women might be better investors overall.
3 On Your Side Consumer Reporter Jim Donovan finds researchers at Stanford are trying to determine whether women react differently to investing because of biological or cultural reasons.
One possible reason that women do better in the stock market could be because they trade less.
That doesn’t surprise Beth Frazier. She’s always had a hunch that women make better investors than men.
She says, “We don’t have enough time to trade as frequently, so we tend to leave our money in there, it grows over time.”
And now it turns out that she’s right. According to Brad Barber, a Professor at the University of California – Davis, “Men are more prone to over-confidence than women so they tend to trade more aggressively as a result of that.”
Barber has studied the stock trading habits of men and women. Among the 35,000 households he surveyed, Barber says over-confidence led men to trade 45 percent more often, while women tended to stay the course.
He says, “Women are more likely to reflect on the information than men are, and are therefore less likely to act on it in a spontaneous way.”
Of the women surveyed, most seemed to follow three simple rules when it involves investing:
First, trade less often. More trades means lower returns.
Number two? “Hot” investments are harmful. Don’t react to today’s buzz. Ignore short-term market movements and only re-balance your diversified portfolio annually, bi-annually or quarterly.
Finally, keep it simple. As a general rule of thumb, the more complex a portfolio, the lower the return.
They are easy strategies that Beth and her fellow investors always follow.
Although women may be better investors than men, they also face bigger obstacles in saving for retirement. Find out why – and what you need to do to make sure you have enough money to retire by visiting the link below:
Reported By: Jim Donovan