by Archie M. Richards, Jr., CFP^®
December 29, 2003

In case you haven't noticed, women are different from men. Researchers have found that they differ even in their investment styles. With accounts of $100,000 or more, men and women act about the same. On smaller accounts, the differences are as follows:

• Women think they know less about investing than they actually do. Men think they know more than they actually do. The difference begins at an early age. Boys in junior high and high schools are almost twice as likely as the girls to consider themselves knowledgeable about money. The actual knowledge of the two groups is about the same.

• Women are afraid of making mistakes. They're less confident, more cautious, and inclined to defer decisions. Once decisions are made, women worry more about having chosen wrong. Men are more confident about decisions and more prone to shoot from the hip without looking back. The overconfidence leads to excessive trading.

• Women can admit mistakes more easily than men.

• Women are less tolerant of risk and more conservative than men. Men accept risk more easily and are more aggressive.

• Women attribute their success to good luck or chance and their failure to lack of skill. Men attribute their success to skill and their failure to bad luck or chance.

• Women think their losses are greater than was actually the case. Men think their successes are greater than was the case.

• Women ask more questions; they want information, not a sales job. Men focus on getting the right answers.

• Women are more intuitive; men more fact-based. (In my opinion, intuition works better. Stock prices generally discount facts before they become known to anyone. By the time the facts are known, it's usually too late to act on them.)

• Women see money as a pool that can be drained empty. Men see it as a flow that keeps on coming.

• Many women feel that money has no value unless it's in the bank. Men are more interested in abstractions and more willing to bet on the future with stocks and bonds.

• Women look upon themselves as the facilitators of relationships and caretakers of the nest. Men are more transaction-oriented and see themselves as providers.

• Women tend to make decisions with others. Men are more likely to invest alone.

• Women are more willing to delegate financial matters to an adviser than handle it themselves. Men are more suspicious of advisers and able to fire them more easily.

• When husbands and wives are interviewed separately, the husbands say that the couple earns more income and has more total wealth than the wife reports. Wives say that the couple has more debt than the husband reports.

• Among married couples, the wife generally balances the household checkbook. Husbands tend to oversee the investments and long-term financial planning.

• On average, women have less time available for investing. True, they work about 10 hours a week less than men. But they spend about 8 hours a week more with children and 6 hours more doing chores. As a result, women have available about 4 fewer hours a week.

• In one survey, men and women were asked which they thought about more: money or sex. Nearly 60 percent of the women thought more about money. About 65 percent of the men thought more about sex.

In general, women are more conservative as investors and trade less often. In one study, researchers analyzed the brokerage account data of over 35,000 households from 1991 to 1997. They found that women traded less often and ended up with higher returns.

Because of their more conservative approach and less trading, women have better investment returns than men. Investment clubs whose members are all women significantly outperform the investment clubs of all men.

Stuff that testosterone back where it belongs, guys. For profitable investing, it doesn't help.