Do you and your spouse disagree on investment strategy? If you are like a lot of married couples, the answer is probably “Yes.” And, there’s a reason. As with many things, men and women come at investing differently.
But who is better at it?
Fidelity investments recently did some research and put data to the question about investing, “Who has greater overall success: men or women?” Most women surveyed got the answer wrong. Only about 9 percent of women believed they had outperformed men over the previous year, when in fact it’s women who tend to outperform men in garnering a return on their investments.
Male vs female investors
Separate Fidelity data show a couple interesting things:
- Women get better returns. Women investors outperform males on average by 0.4 percent per year.
- Women save more. Women save a higher percentage of their paychecks than men. Women averaged 9 percent of earnings saved versus men at 8.6 percent. And women add an average of 12.4 percent to their personal accounts, while men add 11.6 percent.
One of the great investing secrets is: save sooner, save more, let it compound. This strategy is borne out with women investors as you see in this graphic.
Given that women save more and that their investments tend to do better, if they start saving in their 20s, they can outperform men by better than 15 percent. Even if they wait until they are 50 and stop saving at 67, the women outperform men by more than 8 percent. So a little advantage, compounding over time, can make a meaningful difference in your end result.
How best to invest money
One of the things I tell my clients routinely is that success in your financial life is far more dependent on your behavior than your investment selection. Things will go better in your financial life if you:
- Save sooner
- Save more, or
- Save longer.
And you can multiply those benefits if you:
- Diversify your savings into a reasonable mix of stocks and bonds
- Let it compound and don’t mess with the holdings
- Don’t change your mind and cash out of money your recently invested (a good emergency fund is great insurance against making this mistake)
So behavior is key. And, women tend to behave better, according to a recent study by the online investment company Betterment.
They found that:
- Women changed allocations 20 percent less often than men.
- Women tend to do better than men during market swings. Men were nearly six times more likely to make massive allocation changes like a switch from all stocks to all bonds or vice versa. Generally, such a change is a bad idea.
- Women tend to stick closer to the professional advice they get on asset allocations.
Women tend to make a plan and stick with it
So if you and your spouse don’t see financial planning and investing in the same light, give me a call. I have years of experience helping couples get on the same page with their financial goals. As a CERTIFIED FINANCIAL PLANNER™ professional who is my client’s advocate at all times – a fiduciary advisor – and an advisor who only works for my clients – a fee-only advisor, I’m happy to help you get on the same financial page. Yes, I am taking on a few new families as clients this year.
For a free initial visit, contact my office at 612-436-3770 or rdunn@dunncreekadvisors.com. I am always happy to meet with people who are working on their financial plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.