[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/women-better-investors\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/women-better-investors\/","headline":"3 Reasons Why Women Are Better Investors Than Men","name":"3 Reasons Why Women Are Better Investors Than Men","description":"Are women better investors than men? The answer might surprise you. Fidelity Investments actually...","datePublished":"2018-04-07","dateModified":"2022-12-07","author":{"@type":"Person","@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/#Person","name":"Logan Allec, CPA","url":"https:\/\/moneydoneright.com\/author\/logan-allec\/","identifier":4,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Money Done Right","logo":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","width":488,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2018\/04\/Women-Better-Investors-Than-Men.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2018\/04\/Women-Better-Investors-Than-Men.png","height":430,"width":825},"url":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/women-better-investors\/","about":["Stocks"],"wordCount":1711,"keywords":["schema"],"articleBody":"Are women better investors than men?The answer might surprise you.Fidelity Investments actually did a client data analysis that showed, on average, women performed better than men at investing by 0.4%.Other studies have shown the same.Now, this is of course a study of how women and men have invested in a particular time and a particular place with a particular broker, i.e., in the past few years in the good ol’ U.S. of A with Fidelity.So we aren’t talking universal truths here, and there are obviously exceptions.I actually have a girlfriend who invested her life savings in Bitcoin earlier this year, only to see the value cut in half.\u00a0 And my husband is all about the “set it and forget it” strategy that women tend toward (more on that later).Related:How to Invest in the Stock MarketHow to Invest in Real Estate With $500 – $1,00031 Best Passive Income Ideas for 2018But it does hold that at least recently, female investors have outperformed male investors, at least in certain studies.And in this article, we will examine 3 reasons why female investors tend to fare better than male investors.Table of ContentsToggle1. Women Tend to Trade Less.2. Women Tend to “Set It and Forget It.”3. Women Tend to Take Less Risk.What Explains These Behaviors?3 Investment Ideas for Women1. Women Tend to Trade Less.Terrance Odean, a professor at the University of California at Berkeley’s Haas School of Business, found that men trade 45% more than women!And you know what investors have to pay every time they make a trade?A commission to their broker.And commissions can take a significant amount out of investors’ returns over the long run.So naturally the group who tends to trade less \u2014 in this case, women \u2014 will have a huge head start over those who trade more \u2014 in this case, men.Ally Invest is great because you can trade dividend stocks for as little as $3.95 per trade compared to $6.95 at E*TRADE and Charles Schwab.2. Women Tend to “Set It and Forget It.”Believe it or not, “set it and forget it,” rather than frantically trying to beat the market, is by far the best strategy for the average investor.See,\u00a0the\u00a0vast\u00a0majority of professional stock pickers do not beat the market in\u00a0any\u00a0given year, much less routinely.I\u2019m not just talking about your college buddy who dumped his life savings into\u00a0Snapchat stock. I\u2019m talking about professional, well-paid money managers.So the best investment strategy is actually to just invest so that your returns essentially mirror the stock market.\u00a0\u00a0Check out our article How to Invest in the Stock Market for more on this.And this happens to be the investment strategy that women employ more.\u00a0 Women tend to simply plop their money into simple index funds, while men tend to trade more actively in an attempt to beat the market, which they rarely do.3. Women Tend to Take Less Risk.So in their attempts to beat the market, men tend to employ far riskier investment strategies than women.Now surely, some high-risk investors hit it big.But far more absorb huge losses, thus reducing returns overall for the XY camp.What Explains These Behaviors?So I’m not an endocrinologist or sociologist, but I do have some theories as to why women and men have different investing behaviors.HormonesMany would chalk up the differences in male and female investment behavior to hormones.Men, see, have more testosterone, which disposes them toward more aggressive, high-risk, high-return behavior such as trying to beat the market.And while I think this could definitely be the case, I think there is a more compelling case found in traditional gender roles.Gender NormsWhen I first met Logan, I was bewildered by how into personal finance, investing, and passive income he was.Like, why does he care so much about whether or not he reaches his “passive income goals” or not?\u00a0 And why didn’t I care so much?Over the years, as I’ve thought through personal finance and had many conversations with friends, I’ve developed a theory why men tend to be more “into” financial things.So hear me out here.Despite growing equality in the workplace, the expectation in many families (including ours) remains that eventually the female partner will take herself out of the workforce for some time to raise children, while the male partner will keep on working.So I think that more men than women know they’re going to be working the rest of their lives and at some point be the sole breadwinner, and so they are more motivated to pursue things like passive income, which can morph into engaging in risky behaviors like get rich quick schemes.ConfidenceAnd of course, many studies have shown that men have more confidence than women.So naturally the more confident group will engage in behaviors such as trying to beat the market since they trust their own abilities.And the other, less confident group will tend toward a more balanced portfolio, which tends to do better in the long run.3 Investment Ideas for WomenNow, for all their investment prowess, women actually invest at a far lower rate than men!We’d like to fix that here at Money Done Right.Here are 3 investment ideas that you can get started with today.1. Invest in Real Estate With as Little as $500.Logan and I are\u00a0landlords.\u00a0 Our first investment was the mythical “house hack,” a 4-unit property we purchased using FHA 3.5%-down financing.Read:\u00a0How 20-Something Me Bought 4 Units in Los AngelesAnd landlording’s great!\u00a0 We still hold that 4-unit as well as another rental property, and they have been very good to us.But landlording has a major drawback, namely, the amount of time it takes.Time is Money.See, we get a better financial return on our time by working on this blog you’re reading right now than we do by landlording.So rather than spending dozens of our valuable hours on Redfin or Zillow looking for properties we probably won’t even buy, we’d rather invest in hassle-free real estate deals that are way better than what we could find on our own.(Come on; do you really think you’re going to find a good deal on Redfin where everyone else is looking?”)Enter Fundrise.So how do we invest in great real estate deals without being a landlord?By investing\u00a0through\u00a0Fundrise.Fundrise is the first private market real estate investing platform.By combining technology with new federal regulations, Fundrise lets you invest in the once-unattainable world of private investments.Better Deals Than We Could Find On Our Own.Fundrise lets everyday investors like you and me invest in top deals across the nation \u2014 way better deals than we could find on our own.Don’t get me wrong;\u00a0we love the properties we own and landlord.But they weren’t by any means incredible deals.We simply didn’t have the investment capital (we’re talking 7 and 8 figures) to access top deals like Fundrise does.DiversificationAn extremely attractive feature of Fundrise is instant diversification.For example, through Fundrise,\u00a0we\u00a0are invested in multifamily in Arizona, Colorado, Florida, Georgia, Michigan, South Carolina, Texas, and Virginia.And we are also invested in loans funding deals in Los Angeles, Phoenix, and San Diego.Economies of ScaleAlso, because Fundrise invests in large assets with many units, you get economies of scale.If you own a single-family home, and you lose your tenant, you’re out of luck.If you own a 4-unit, and you lose a tenant, you’re still making money.But if you own a 100-unit apartment building, and you lose a tenant, there’s a professional management company on-site ready to show the unit immediately to minimize your vacancy losses.Get Started With Only $500!This is why we love investing in Fundrise:\u00a0we get to invest as little as $500 into deals previously reserved for the richest of the rich.Fundrise also offers a money-back guarantee.For the first 90 days of your investment, they\u00a0will buy your investment back at the original investment\u00a0amount if for any reason you are not satisfied.2. Lend money in $25 increments earning 4-6%.Lending out money is one of the oldest ways to earn passive income. \u00a0It’s essentially renting out your money for either people to use, and the rent you charge is known as the interest rate.Now, in the old days, if you wanted to lend money\u00a0to somebody in particular, you were taking on a pretty risky business, unless he or she put up some form of collateral. \u00a0But now, thanks to technology, you can spread out the risk by only lending your money in $25 increments.How does this work? \u00a0Well, let’s say Borrower A needs a $25,000 loan. \u00a0Instead of going to one entity, like a bank or rich person, to borrow the full $25,000\u00a0\u2014 which would be very risky to that one entity\u00a0\u2014 he or she borrows $25 from 1,000 people. \u00a0This scenario presents much less risk because the most any single investor could lose is only $25.Such an arrangement would have been administratively impossible just 15 years ago. \u00a0But thanks to the wonders of the Internet, it is now very possible, and the peer-to-peer lending industry, as it’s known, is thriving for borrowers and investors alike.3. Invest in dividend-paying stocks.We love dividends here at Money Done Right.When you invest in a dividend-paying stock, you are acquiring a portion of a company that somebody else built and that thousands of other people work for, and they are giving you a portion of their profits. Blows my mind!There are plenty of great places to open up a stock-investing account, but the one that’s getting us hot and bothered at the moment is Ally Invest.Ally Invest is great because you can trade dividend stocks for as little as $3.95 per trade compared to $6.95 at E*TRADE and Charles Schwab.Ally Invest has developed a pretty amazing platform, and no matter if the stock market goes up or done, we still get dividends deposited into our Ally Invest account every quarter!"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Passive Income","item":"https:\/\/moneydoneright.com\/passive-income\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Stock Investing","item":"https:\/\/moneydoneright.com\/passive-income\/\/stock-investing\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"3 Reasons Why Women Are Better Investors Than Men","item":"https:\/\/moneydoneright.com\/passive-income\/stock-investing\/women-better-investors\/#breadcrumbitem"}]}]