Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
Who’s better suited to handle family investments: a man or a woman? Careful, science — and your partner — might not support your answer.
A recent survey by U.S. Trust of about 650 adults found nearly 75 percent of wealthy husbands say they are more qualified than their wives to make investment decisions. Roughly the same percentage of those surveyed have what they believe to be “majority control” of their family’s retirement funds and investments.
But almost all the research on this topic indicates women are better equipped to make investment decisions. Most studies show men are willing to take on larger investment-related risk, which can lead to larger losses when things don’t work out. Women tend to be more conservative and risk-averse, thus limiting potential losses.
The most recent study, conducted by Richard Peterson, MD, argues women are more attuned to their emotions and more willing to heed their intuition when making investment decisions. Their emotional awareness provides a firewall that helps prevent rash financial decisions based on greed, fear or excessive hype. By paying attention to their intuition, women are often better able
Based on my experience as an investment advisor, there might be something to this. Women do tend to convey the message “I want to protect what I have” while men often express a desire for “increasing returns.” That said, I’m not sure we can declare a winner in the “Battle of the Sexes: Investment Edition” without considering market conditions. Think about it: Those aggressive guys likely had great returns during the bull market of the 1990s, while women may be faring better in the flat market that has dogged us for 12 years.
Or not. Who really knows? The fact is all investors are well served by two personality traits that aren’t unique to either sex: patience and discipline.
The path to real investing success is less about finding the right stock or hitting the lottery, and more about getting the fundamentals right, then setting a course and sticking with it.
Some basics to remember:
Seek balance: Your portfolio should always contain a carefully allocated mix of investments that provide cash, income (bonds), growth (stocks), along with alternatives vehicles that don’t neatly fit into the stock or bond bucket.
Set a goal: The only thing that ultimately matters in investment planning is meeting your own objectives. Do your homework and craft very specific and realistic goals.
Keep your costs low: Be mindful of all the fees and costs you incur when you buy a particular investment.
Stay the course: Very few people ever get rich overnight. Most wealthy people earned their money slowly, methodically and with hard work.
Who handles the money in your house?
– Wes Moss, for Atlanta Bargain Hunter