• October 2012

Do Women Really Invest Differently Than Men?

By Carmen Martinez
Financial Adviser
Egan, Berger & Weiner, LLC

Do men and women invest differently?

Books, research, and independent studies have concluded—yes, women do invest differently than their male counterparts. And, in many cases, it leads to greater earnings, especially in the long-term.

As a financial adviser, having observed the investment behavior on Wall Street for more than 25 years, I must say that I concur.

So, what exactly is the difference in the male and female approach?

The reasons are varied, as you’ll see below. But, studies show:

  • Women tend to have conservative attitudes toward risk-taking and demonstrate a steady temperament to their investment strategy.
  • Men, on the other hand, typically are overconfident and demonstrate unsteady temperament to their investment strategy.

Let’s take a look at how these differences have developed.

Traditionally, women have lower lifetime earnings than men, creating less wealth.

According to Forbes Magazine, “Ample research has persistently shown that the wages of women, irrespective of qualifications and experience, are lower for the same kind of work.” 1.

Although some of gender division of labor is changing, historically, women have made different choices than men due to greater family responsibilities.

In her article, Gender Differences in Personal Savings Behavior,
for the Association for Financial Counseling and Planning Education, Virginia Tech Consumer Studies Program Professor Patti Fisher explains that because women in the United States have been dependent on men for financial security for so many decades, gender differences in economic well-being persist.

“In 2003, 28.0 percent of single female-headed households were living in poverty, compared with 13.5 percent of single male-headed households, and 5.8 percent of married couple households; and there are sizable gender gaps in both current and projected retirement income,” she writes, noting that, overall, there is a substantial gender gap in all retirement income sources, including Social Security, pensions, savings, and earnings from post-retirement employment. Poverty rates were also significantly higher among women in all but two of the developed countries. 2.

Financial literacy also plays a significant role.

According to the report Financial Literacy and Retirement Preparedness, researchers Annamaria Lusardi and Olivia S. Mitchell explain how financial literacy has been found to affect both savings and investment choices.

“Our review reveals that many households are unfamiliar with even the most basic economic concepts needed to make saving and investment decisions,” they explain. “Such financial illiteracy is widespread: the young and older people in the United States and many other countries appear woefully under-informed about basic financial computations, with serious implications for saving, retirement planning, mortgages, and other decisions.” 3.

Men simply have had more time than women to accumulate wealth.

In a 40-year working career, the average woman loses $431,000 as the result of the wage gap, explain Sarah Jame Blynn and Audrey Powers in their highly insightful article, The Top 10 Facts About the Wage Gap. Consequently, the median earnings for women were $36,931 compared to $47,715 for men, and neither real median earnings nor the female-to-male earnings ratio have improved since 2009. 4.

Men also tend to have more financial knowledge than women, and therefore tend to be more confident.

But sometimes this works against them when it comes to making good decisions. According to a Wall Street Journal article by reporter Jason Sweig, “… in the testosterone-poisoned sandbox of the male investor, the most important thing is beating the other guy; the second most important: bragging about it…[and] asking for advice is an admission of inferiority.” 5.

This may be an over-exaggeration of men’s overconfidence—but then again, it does drive the point home.

Why Does Warren Buffett Invest Like a Girl?

So what’s the best strategy? “Think like Warren Buffett,” insists author LouAnn Lofton, in her recent book, Warren Buffett Invests Like a Girl—And Why You Should, Too. 6.

“Behavioral economics has shown us that women are more risk-averse than men,” Lofton explains. “That they trade less and their investments perform better, that they are more realistic, that they are more consistent investors, and that they tend to engage in more thorough research and ignore peer pressure.”

“That’s why Warren Buffett, and the women of the world, have one thing in common: They are better investors than the average man,” Lofton explains.

Lofton points to the following characteristics of female investors, which distinguish them from their male counterparts:

  • Women spend more time researching their investment choices and tend to take less risk than men do. This prevents them from chasing “hot” tips and trading on whims. Women are also more likely to seek out information that challenges their assumptions.
  • One study found that men trade 45 percent more often than women do, and although men are more confident investors, they are also more susceptible to becoming overconfident. By trading more often—and without enough research—men reduce their net returns and increase transaction costs and capital gains taxes.
    Women aren’t as susceptible to peer pressure as men are, which results in a more levelheaded, patient approach to investing.
  • Women have less testosterone than men do (not a surprise, we know). New and continually unfolding science points to the possibility that testosterone is responsible for herd like risk-taking behavior from men in the financial markets.

“While men may be brash, compulsive, and overly daring, women tend to be more studious, skeptical, and reasonable,” Lofton concludes, adding that her goal is to empower and educate women—and the men smart enough to embrace a “feminine” investing style—on how to strengthen their portfolios and find success in the market.

What can be learned from the investment differences between women and men?

Whether you are a women or a man, the key lessons are the same: Your temperament will be the most important factor in how you approach investment, and therefore may impact how much you can potentially earn.

Consider this parting thought from Warren Buffet, as quoted in Warren Boronson’s book, Pick Stocks Like Warren Buffett: “The most important quality of an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” 7.


1. Forbes magazine: Wage Differences Between Men and Women, by Freek Vermeulen, Feb. 28, 2011

2. The Association for Financial Counseling and Planning Education: Gender Differences in Personal Savings Behavior, by Pattie J. Fisher, Volume 21, Issue 1, 2010

3. Business Economics: Financial Literacy and Retirement Preparedness, by Annamaria Lusardi and Olivia S. Mitchell, December 2006

4. Center for American Progress: Top 10 Facts About the Wage Gap, Sarah Jane Glynn and Audrey Powers, April 16, 2012

5. Wall Street Journal: For Mother’s Day, Give Her the Reins to the Portfolio, by Jason Sweig, May 9, 2009

6. Warren Buffett Invests Like a Girl, by LouAnn Lofton, published by HarperBusiness, June 2011

7. J.K. Lasser’s Pick Stocks Like Warren Buffett, by Warren Boronson, published by Wiley, Oct. 26, 2001

About Carmen S. Martinez

Martinez partnered with Egan, Berger & Weiner, LLC in August 2007. She brings 25 years of experience in the financial industry, having served as financial adviser, branch manager, regional manager, chief operations officer, and vice president of a regional banking institution.

A graduate of the University of Southern California, with a Bachelor of Arts degree in Political Science/International Relations, Martinez is an active member of the Rotary Club of McLean, a community service organization, and has served on the board of directors for five years.

She is also an active member of the Financial Planning Association and the Financial Services Institute, and is currently enrolled in the College for Financial Planning.

Raised in California, Martinez moved to the East Coast in 1987 and now resides in Alexandria, VA. The oldest of nine children, she enjoys spending time with her 19 nephews and nieces. In her spare time she pursues one of her lifelong passions for art by drawing and painting portraits, landscapes and still life.

For more information, send her an email at: cmartinez@ebwllc.com.

_Securities and Investment Advisory Services offered through Voya Financial Advisors, member
SIPC. Egan, Berger & Weiner, LLC is not a subsidiary of nor controlled by Voya Financial Advisors._

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