Gay marriage 311.
(photo credit: REUTERS)
There have been many studies that show that women are better investors than men.
An article in SmartMoney recently quoted a study confirming what many had
already known: “A new study by Barclays Capital and Ledbury Research found that
women were more likely to make money in the market, mostly because they didn’t
take as many risks. They bought and held. Women trade this way because they
aren’t as confident, or perhaps as overconfident, as men, the study
Other research has shown that single women enjoy better returns
than single men because of far less frequent trading. Elizabeth MacBride of
Wealthfront wrote, “Sorry, guys, but the evidence is clear that some of you tend
to be afflicted with overconfidence that leads to one of the most obvious
investment mistakes: active trading. Using account data for over 35,000
households from a large discount brokerage, Brad M. Barber and Terrance
Odean of the University of California-Berkeley looked at the common stock
investments of men and women from February 1991 through January 1997. They did
the research when both were at the University of California-Davis, where Prof.
Barber remains. Prof. Odean has since moved on to the University of
“They found that men traded 45 percent more than
women and that trading reduced men’s net returns by 2.65 percentage points a
year as opposed to 1.72 percentage points for women. The effect was even more
pronounced when the researchers compared single men and single women. Single men
trade 67% more than single women, thereby reducing their returns by 1.44
percentage points per year more than do single women.”Perfect Ladies?
Okay so enough ragging on men.
Believe it or not, women are NOT perfect
investors either. There is one mistake that they make and that is that they tend
to be way too conservative. Research shows that they tend to hold onto
large amounts of cash instead of getting that money invested. Being risk-averse
worked to their benefit a few years ago when the market crashed but over the
long term it actually costs them significant amounts of money.Put a ring
Maybe Beyonce knew what she was talking about!
Believe it or not, recent
data shows that married couples actually perform better with investments than
single men and women. They both bring their strengths to the “investing” table,
and that helps investment returns.
My colleague Zack Miller recently had
a piece in Forbes where he spoke about this phenomenon.
“A study (The
Effects of Marriage and Divorce on Financial Investments: Rangvid, Joensen and
Christiansen) on investing patterns in marriage and divorce, showed that members
of a married couple adjust the portfolio’s risk profile to jive better with
their partner’s tolerance for volatility. Married men dial risk down and hitched
women tend to own more stocks than they would when they were single. And that
spells more stock market participation for married couples than for single men
and women. In fact, married couples generally perform better than single men and
women, at least when it comes to retirement investing.
7,000 retirement accounts, researchers found that married couples had 42.88% of
their portfolios in stocks, while unmarried people averaged only 36.52%. That
exposure to the stock market, combined with less male-driven trading, means
married couples in that same research performed better than single (8.92% per
year vs 8.16%). When men and women work together on the investing
equation, the whole turns out to be greater than the sum of the
magazine ran a survey a few years ago that showed husbands
and wives divvy up money-related tasks along very traditional lines, with men
doing most of the big-picture, long-term planning and women managing the
day-to-day budgeting and spending. Based on the aforementioned data that Miller
speaks about, this is a big mistake.
By being involved in the long-term
planning with their husbands, women are actually helping the long-term financial
situation of the marriage.
Oh and by the way, did I mention that
yesterday was my 12th wedding anniversary? Happy investing dear, uh, I mean
happy anniversary! email@example.comAaron Katsman is a licensed
financial professional both in the United States and Israel, and helps people
who open investment accounts in the United States.