Women Investors: Smarter Than the Men in Every Way?
Special reports on women and investing are nothing new. Nearly every company in the financial services industry has published one in the past decade, and the results tend to describe women in less-than-flattering terms.
If you took a gander at these reports, you'd probably come away with the impression that we're poor little helpless things, woefully ignorant about investing details. We prefer to leave financial planning to others. According to one report from Prudential, women "do not fully understand many of the increasingly sophisticated financial products that are available."
As for how the fairer sex compares to the guys: A 2011 Barclays study of high-wealth individuals states: "Men have higher composure than women; that is, they are less likely to believe they are easily stressed."
Fewer Risks, More Rewards
Well, clutch those pearls and hang onto your bonnets, because in a recent survey of 4,000 men and women in the U.S., U.K., and Canada, 90 percent of female investors said they felt "quite confident or level-headed about managing their portfolio." And more than 75 percent say they've been "very or somewhat successful" in choosing investments.
The survey was conducted by TD Bank Group, which includes TD Ameritrade (AMTD) in the United States, TD Waterhouse in Canada, and TD Direct Investing in the United Kingdom.
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Based on the scientific research on men and women and investing, the TD study isn't exactly a surprise. Multiple studies have shown that female investors tend to be more risk-averse than their male counterparts. Because of this, women consistently do more research than men before making an initial buy, trade less frequently, and hold longer.
The result? Women in the TD study told surveyors they hadn't changed anything in their portfolio because of the market's recent instabilities, and were confident that their long-term plans were sustainable in the face of them. Even the Barclays study mentioned earlier concedes that "men are more likely than women to try and strategically time the market instead of simply buying and holding. Yet men must have some indication that this is not an effective strategy -- or at least that it is one that they take too far."
Knowledge Is Power
The difference between the Prudential and Barclays studies versus the one conducted by TD is that TD polled women who are primarily online, self-directed investors. The study results also theorized a link between women who manage their portfolios online and their level of confidence; women in the U.K and the U.S. were slightly more confident than the Canadian women surveyed, and were more likely to have online accounts.
Can investing online empower women investors? Of course. But a portfolio that's self-directed by any individual, whatever their gender, requires more investor engagement than one that's left to a broker. Doing so online can also raise an investor's confidence levels. Online brokerages offer a variety of easily accessed research options, and questions that might seem dumb when asked out loud can often be answered in relative obscurity in the help section of the brokerage's website.
The Few, the Proud, the Online, Self-Directed Investors
It's important to remember the limitations of such surveys and to not use the data to make sweeping statements about an overall demographic.
The Prudential study interviewed 1,250 American women, the Barclays study 2,000 "individuals," and the TD study surveyed 4,000 men and women across three countries.
It would be wonderful to think that women everywhere are newly empowered investors, the fact is, that with the study focusing on online, self-directed investors, TD leaves out huge numbers of women who don't invest and aren't inclined to do so.
It's great that women investors feel empowered, but it's just a start.
Motley Fool contributor Molly McCluskey writes about personal finance, investing and budget travel. Follow her on Twitter @MollyEMcCluskey.
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