Want better Investment Performance? Let Your Wife Make Investment Decisions
One of the longest running disagreements, dating back to cave-living, is which of the sexes is better at doing certain things. We know that, generally, women are better cooks and men are better at changing a tire; but, there is still some deep division between the sexes as to who are better drivers (although the empirical evidence shows women to be safer drivers). Add to that list the issue of who makes better investment decisions. Clearly, the investment world has been the domain of men; however, the evidence is also clear that, over the long term, women make better investment decisions than men.
Several studies have shown that the investment performance of female investors is superior to that of male investors when measured over a period of time. One study, conducted by Merrill Lynch on more than 30,000 households, showed that married women were able to beat the investment returns of their male counterparts by more than one percentage point. Single women outperformed men by a point and half!
Among the many reasons cited by the studies women are more risk adverse; but, perhaps more telling, is the ability of women to maintain self-control and discipline under times of stress, when the male ego generally takes control. Women are more patient than men and tend to have a more long-term outlook when making investment decision. Is it any wonder, then, that Warren Buffet, the world’s most successful investor, has been accused of “investing like a girl”?
In a married household, husbands may be reluctant to relinquish their place as the investment decider; but, the smart money says that having a woman’s influence in investment decisions will likely lead to better long-term performance.