It’s a question as old as time, do you invest better than your spouse? The answer may be yes or it may be now. However the odds are one of you is more disciplined and probably more conservative. Is a conservative investor a better investor? That depends on your goals, but according to a recent study by Kiplinger the answer may be yes, women invest better than men – for a variety of reasons.
Being a good investor doesn’t mean you have the highest rates of return, although some people think it does. If you choose your investments wisely, stay calm during market turmoil and avoid day trading to try and time the market then you probably invest better than your husband.
Here are five qualities that make a good investor:
Do research your investment options before buying
Women aren’t known for making rash decisions. According to the Kiplinger survey they take their time choosing their investments after researching the options. Looking at a mutual fund’s investment objectives and asset allocation mix will help you decide if it’s aligned with your goals.
Although past performance is no indication of future performance, looking at how an investment fluctuated with market conditions let’s you know if you have the stomach to weather the storm.
If you panic less you’ll get better results
The secret to making money in the stock market is to buy low and sell high, so why do people sell their investments after the stock market crashes? It’s because they panic. If you keep calm and stay invested – or even buy more when prices are low – you’ll come out a winner. People who constantly buy and sell with emotions, on tips or with market changes tend to make bad decisions and lose money.
Invest in what you know
Trying to find the next big thing is a huge mistake when it comes to investing. Stick to what you know because it provides peace of mind and helps avoid temptation to sell when things get rough.
If buying foreign investments makes you uncomfortable then don’t do it, even if they have historical profits the potential gain isn’t worth the risk of being unsure.
Think (and invest) for the long term
Trading often in an effort to time the market is a bad idea. Just keep calm and stay invested during both the good and bad times says Kiplinger. “Women were more likely than men to say their number-one personal financial goal is to “retire with financial security and peace of mind” (52% versus 45%).”
This only happens if you continuously invest on a regular basis and leave your money where it is until you need it in retirement.
Ask for the help of a professional
This goes back to being lost and needing to ask for directions. Women are probably the first one to say “we need to stop and ask for directions” while men prefer to go at it alone in hopes that they’ll find their way. The same is true for investment advice.
According to Kiplinger “women are more likely than men to ask questions of a financial adviser (26% to 20%) or talk to friends and family (10% to 4%).” I think gaining wisdom from someone with knowledge is always a good thing – but that’s probably because I’m a financial planner.