Women are more risk-averse as investors

41 Replies

Women are more risk-averse as investors, and while this is often blamed on a lack of financial literacy, the issue is more one of confidence, not competence: 45% of women with $1 million in investible assets were deemed financially literate in a study by the Center for Talent Innovation, versus just 39% of men. Yet only 30% of women said they were confident in their knowledge, versus 34% of men. “Men will invest through a lack of knowledge,” Krawcheck says, “but women—not so much.”

https://www.barrons.com/articles/womens-retirement-planning-what-wall-street-misses-1455343712?mod=article_inline&mod=article_inline

Men invest through a lack of knowledge and women do not... much to their own personal detriment. I've seen this to be true. If you're a female investor that wants to invest but has not yet, does this ring true for you? 

@Erin Spradlin

I can only agree with this about myself, I can’t make a generalized judgement about others because we’re all different. I’m younger, bolder, and have less to lose so risk taking with a lack of knowledge kind of comes with the journey. How are you supposed to learn if you don’t venture into the unknown? If I was older, more experienced, and something to lose then I’d be less opportunistic and more conservative. However as a 26 year old - full speed ahead!

I follow this quote from a famous Billionaire whenever I hesitate on a decision involving a lack of knowledge. “If somebody offers you an amazing opportunity but you are not sure you can do it, say yes – then learn how to do it later.”

In my area single unmarried women buy houses at something like 5x or 10x the rate of single unmarried men. It's one of those things that the difference is so extreme you don't really need a source, anyone that has been around water knows that "water is wet." 

It's true that men seem to out-earn women in many professions(1), and since retirement accounts are funded by those wages men end up with bigger retirement accounts (OP article, and a million others, attest to this). Are women making up for this with real estate equity/appreciation to any degree, and how does that change things if that were included in the measurements?

(1) Side note, female Realtors and loan originators(2) seem to do pretty damn well, relative to many many other professions. Perhaps b/c they are on average more likely to take the concerns of the female in the canonical marriage seriously?

(2) Side note to the side note. Not always easy to directly measure this. One of the top LOs in my market isn't on any charts or anything, b/c her assistant's assistant is the loan originator of record on all the paperwork (but no Realtor or consumer ever notices that).... hate to stereotype, but typically men are damned sure to make sure it's their name on everything. 

@Nick Rutkowski - totally agree. I think sometimes people feel bold about investing and can be bold about investing, but their circumstances are different. This seems especially true if you have kids- that's a different responsibility level and I totally understand why someone in that position would hesitate.

All that said, I find it frustrating to see women not accumulate wealth as fast as men because they are being thoughtful about it. I think the adage fortune favors the bold is true and we need to work harder to educate people on how to make this step. 

@Chris Mason - Interesting. I definitely do not see females investing, single or otherwise, investing more than men where I live. I definitely think you see some trends suggesting they are doing more investing, but it's still not anywhere close to equal... Obviously, the situation is complex- is it related to family responsibilities, reduced pay, reduced opportunity, risk aversion, etc. 

As to female agents, I can't speak for others.. but I often married females to be my real end user. And with that, I typically do not get on the phone with interested male investors or buyers unless their wives are also on the phone- just to make sure everyone is on the same page/has the same info. 

@Erin Spradlin

It does seem frustrating, however we can't save everyone they need to save themselves. I find helping those in my circle elevate their game is the best change for the world. Although I'm a risk taker I couldn't have done it without my risk adverse girlfriend. Maybe we all need someone to dive in with to take some of the stress off investing in REI.

@Nick Rutkowski - I definitely did. Hate to admit it, but I definitely felt more comfortable doing it with my husband. It was like we are going to make a really smart or really stupid decision, but we're going to do it together. 

Originally posted by @Erin Spradlin :

@Chris Mason - Interesting. I definitely do not see females investing, single or otherwise, investing more than men where I live. I definitely think you see some trends suggesting they are doing more investing, but it's still not anywhere close to equal... Obviously, the situation is complex- is it related to family responsibilities, reduced pay, reduced opportunity, risk aversion, etc. 

As to female agents, I can't speak for others.. but I often married females to be my real end user. And with that, I typically do not get on the phone with interested male investors or buyers unless their wives are also on the phone- just to make sure everyone is on the same page/has the same info. 

 Ah, I was referring more to single unmarried people buying houses to personally live in. That, in my area, is what is 5x or 10x F to M.

I can't speak for others, but I am less willing to take a chance than most of the men I know.  Still I have real estate investments which according to some might be risky.  For real estate most of the people I know with rentals are women. I am fine with slow and steady and don't need to make a quick buck. 

Not surprised by this at all . There is a reason eve ate the forbidden fruit first and was tricked . Women in general think and make decisions with emotions instead of rational logic like men . This leads them into trouble . 

Originally posted by @Dennis M. :

Not surprised by this at all . There is a reason eve ate the forbidden fruit first and was tricked . Women in general think and make decisions with emotions instead of rational logic like men . This leads them into trouble . 



You either misread or didn't read the OP- men are the ones more prone to overconfidence and more likely to invest despite a lack of knowledge. Does doing that seem like non-emotional, rational logic to you?

 

@Erin Spradlin Risk aversion shouldn't be looked at as a blanket negative. Some of the best investors in the world (Gundlach, Marks, Buffet) all heavily prioritize risk management. To the contrary, there nothing more inexcusable than a fool charging in headlong and losing their *** due to risk ignorance. 

As far as fortune favoring the bold, I'd say more consistently, it favors the shrewd.

Originally posted by @Dennis M. :

Not surprised by this at all . There is a reason eve ate the forbidden fruit first and was tricked . Women in general think and make decisions with emotions instead of rational logic like men . This leads them into trouble . 

I don't know, Dennis, I'm pretty sure it was Adam and Steve, and Steve screwed the pooch and came up with the idea to blame it all on their beard.

In the grand scheme of things why would gender have anything to do at all with investing in real estate in your opinion? Nobody that I have ever met has told me they bought property soley because of their gender. Everybody has their own reasons for the things they do in their lives. I agree that confidence pays a large roll in it more than anything else when it comes to investing in anything 

@George W. The stats don't lie though... men invest much more than women, and that is a gender thing. I do think it has to do with men overestimating their confidence or feeling more comfortable making a decision with less information than women feel. I don't see this as an emotional thing or a non-emotional thing (because I know tons of male investors that base their decisions on emotions and not data), but I do see the difference between the sexes as being how they take information in and at what point they are comfortable making the decision. 

@David A. - Perhaps... but it also seems to favor the bold, even if they do act a little foolishly. That has to be the truth because we know that women invest at a much slower rater than men (we know this through data, and I can tell you as someone that works with a ton of investor, it's also anecdotally true). What reason would this be other than reservations around making large financial decisions?

This isn't to say that people shouldn't be responsible- they should, but it's the comfort level that is creating a serious barrier to investing for most women. (We know they have no problem making a housing decision- it's just when you call it investing that it becomes an issue.)

@Theresa Harris - Interesting.. most of the people I know with rentals are men or married men/women. I know a few female investors, but, in my experience, it is usually males that feel more comfortable doing it... and to be totally honest, my husband definitely pushed the conversation in our household. 

Originally posted by @Erin Spradlin :

@Theresa Harris - Interesting.. most of the people I know with rentals are men or married men/women. I know a few female investors, but, in my experience, it is usually males that feel more comfortable doing it... and to be totally honest, my husband definitely pushed the conversation in our household. 

 That's interesting.  My parents had some rentals when I was growing up.  Pretty sure it was my mom's doing and she looks after a few of my rentals as they are closer to where she lives..  

Originally posted by @Erin Spradlin :

@George W. The stats don't lie though... men invest much more than women, and that is a gender thing. I do think it has to do with men overestimating their confidence or feeling more comfortable making a decision with less information than women feel. I don't see this as an emotional thing or a non-emotional thing (because I know tons of male investors that base their decisions on emotions and not data), but I do see the difference between the sexes as being how they take information in and at what point they are comfortable making the decision. 

You can certainly sit around and look at data all day long and I'd imagine that there probably are more Male investors. confidence in purchasing may play a roll but that is more opinion based than data. With that being said it is not a gender based decision on whether one person would buy a rental unit or invest in general at all. Acutally my mother was more influential on rentals for me than my father and she bought units on her own more than my father ever did after they divorced but both bought rentals because they wanted a better future for themselves. Not because of their gender. There are not any physical barriers stopping either gender from investing in real estate. Theres nothing stopping more women from entering the financial field either. In fact the article that you shared said that many financial companies would love to hire more women financial advisors to connect more with female clients. While it may be true that more men tend to invest, gender has nothing to do with the decision on a personal level whether to invest in real estate or not. 

I mentored a female who was very "risky" and would not listen to my advise. She ended up losing on her big flip and left the business. Back to the day job zzzzzzzzz

@Erin Spradlin . If anything, the men are investing because the women told them what to do. I work with investors all day. The vast majority of men do what their spouses tell them to do. Maybe I’m living in a different bubble, but I run the financial show in my house.

@Victor S. I take issue with the dismissive tone Mr. Perry employes in that  first article, although I do find the information interesting. That said, it was hard to get over what an *sshole that guy is.