Investing used to be a male-dominated activity, but women are slowly but surely closing the gap. According to studies on women and investing, around 60% of women now invest in the stock market, and younger generations report an even higher proportion of female investors.

Men still have higher average balances, which isn’t too surprising given the gender pay gap. But data shows that women have better returns than men over time. Here are some possible reasons.

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1. Women tend to invest more conservatively

Studies on differences in investment behavior between genders have found that women tend to invest moderately or conservatively, while men tend to take an aggressive approach. According to Wells Fargo, about 53% of women chose a moderate approach, while only 39% chose an aggressive approach. This is almost the exact opposite of what we see with male investors: about 39% of them chose a moderate approach and 55% chose an aggressive investment strategy.

Aggressive investing can lead to bigger gains, but it also opens the door to bigger losses. By investing more conservatively, women may be able to protect themselves from some of the downsides and still make a decent profit.

2. Women are less likely to jump on investment trends

Data also shows that women are less likely than men to invest in something just because it’s trending. For example, a 2021 Robinhood survey found that 41% of female investors have no interest in investing in cryptocurrencies, compared to 24% of male investors.

This may be partly because women are less confident in their investing skills. This may lead them to look for more proven investments, such as stocks of well-known companies or index funds. These may not have the huge return potential that many hope for from investments like cryptocurrencies, but they can offer slow and steady growth over time.

3. Women tend to remain calm during market volatility

Fidelity found that women were 8% more willing to ride out market volatility than men. Men were significantly more willing to increase their investments and slightly more willing to decrease their investments during uncertain times.

Investing more might be an attempt to time the market by buying more stocks when prices are low in the hope of making bigger gains when stock prices rebound. But this doesn’t always work out the way investors hope – you never know when prices will bottom out and when they will start to rise again.

Likewise, selling assets during times of market volatility can result in losses that you could have otherwise recouped if you had simply left your investments unchanged. Women may suffer fewer such losses because they are more inclined to leave their portfolio unchanged during these times.

Try it yourself

Regardless of your gender, you can use the tips above to boost your own investment returns. Review your investment strategy and consider changing it if you feel you’ve taken on too much risk, especially if you’re nearing retirement. And review your portfolio less often if you’re tempted to make investment decisions based on a stock’s recent performance.

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