{"id":9092,"date":"2022-01-30T08:22:35","date_gmt":"2022-01-30T12:22:35","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=9092"},"modified":"2022-01-30T08:22:45","modified_gmt":"2022-01-30T12:22:45","slug":"women-are-less-likely-to-panic-over-their-investments-than-men","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=9092","title":{"rendered":"Women are less likely to panic over their investments than men"},"content":{"rendered":"
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I couldn\u2019t let this MIT study pass me by.<\/span><\/div>\n<\/div>\n<\/div>\n
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Can you say, \u201cFreak Out?\u201d<\/p>\n

Researchers at the Massachusetts Institute of Technology found that investors who are male, above the age of 45, married, and say they have \u201cexcellent investment experience or knowledge tend to \u201cfreak out\u201d with greater frequency than other investors when markets dive.<\/p>\n

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They dump their portfolio holdings in \u201cpanic sales,\u201d according to that\u00a0analysis o<\/a>f more than 650,000 anonymous individual brokerage accounts drawn randomly from one of the largest brokerages in the United States.<\/p>\n

Read on MarketWatch<\/a><\/strong><\/p>\n

Hmm. Who\u2019s emotional about investing? That\u2019s typically a rap that women get. The researchers defined a panic sale as a plunge of 90% of a household account\u2019s equity assets over the course of one month, of which 50% or more is due to trades.<\/p>\n

\u201cFinancial advisors have long advised their clients to stay calm and weather any passing financial storm in their portfolios,\u201d wrote researchers Daniel Elkind, Kathryn Kaminski, Andrew Lo, Kien Wei Siah and Chi Heem Wong. \u201cDespite this, a percentage of investors tend to `freak out\u2019 and sell off a large portion of their risky assets in certain adverse market environments.\u201d<\/p>\n

Waiting too long to reinvest<\/strong><\/p>\n

\u201cWhile freaking out does protect investors during a crisis, such investors often wait too long to reinvest, causing them to miss out on significant profits when markets rebound,\u201d they noted.<\/p>\n

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The occupational groups with the highest risks of panic selling are generally \u2018self-employed\u2019, or \u2018owners,\u2019 which I can understand as a solo business operator. It\u2019s terrifying to see your assets disappear when you might need to tap funds sooner than you planned to cover expenses should your business fall off for some reason.<\/span><\/div>\n<\/div>\n

In general, being young, or elderly, decreases the risk of panic selling, according to the findings, which makes sense to me. When you\u2019re young, you know you can wait it out. For those who are elderly, presumably, you have been through ups and downs many times before and are aware of the value of sitting tight.<\/p>\n

Overall, the report and the headlines it grabbed tickles me. It\u2019s women who are always called out for being risk averse. But as I have advised for years in my workshops,\u00a0books<\/a>\u00a0and articles, women are better investors than men when they get down to it.<\/p>\n

Studies have shown that over time women\u2019s retirement investments outperform their male counterparts. In large measure because, women don\u2019t\u00a0freak out<\/em>. We don\u2019t buy and sell our investments wearing our emotions on our sleeves. We don\u2019t go for the homeruns, or the dump and run when thing go south.<\/p>\n

Research and patience<\/strong><\/p>\n

We do our research. We take out time deciding what to invest in. We ask questions, and we tend to stay the course, patiently letting our investments grow.<\/p>\n

This drives financial advisors batty at times. Many male financial advisors I\u2019ve spoken to often roll their eyes and off the record say they find working with women investors, particularly divorcees and widows, to be frustrating. When I first got married, I tried to work with my husband\u2019s male advisor, and, it was not for me, or him, I suspect.<\/p>\n

That\u2019s why I often recommend women seek out advisors who have a more\u00a0holistic approach<\/a>\u00a0and understands their individual values and priorities. I also prefer working with a female advisor who is around my age to be honest.<\/p>\n

This report didn\u2019t surprise me one iota. But I did make me grin at those brave swashbucklers who brag about their investment savvy and run for the hills when things get shaky in a sharp market downturn. And I simply love that the researchers call this phenomenon \u201cfreaking out.\u201d<\/p>\n

So, unlike what a woman might do.<\/p>\n

I admit while I am a big fan of the slow and steady tortoise approach to investing, I regularly urge women of all ages to step it up periodically when it comes to investing in stocks or stock mutual funds, which have benefit of higher rates of return over longer time horizons than fixed-rate investments.<\/p>\n

It can be a tough sell. Data from\u00a0LT Trust<\/a>\u00a0found that during the pandemic, 78% of boomer men increased their retirement portfolio of stocks while only 51% of women did.<\/p>\n

Do not look at it every day<\/strong><\/p>\n

I interviewed Michelle Connell, owner of Dallas-Fort Worth-based\u00a0Portia Capital Management<\/a>, for this Next Avenue\u00a0column.<\/a>\u00a0\u00a0She was resolute about boomer women needing to alter their normal safety-first attitude about investing. \u201cWomen need to take more risk and balance it out if they are going to finance a life expectancy nearing ninety and the potential for rising inflation,\u201d she said.<\/p>\n

Connell suggested picking out \u201ca few stocks or a basket of stocks in a mutual fund or exchange traded fund. And do not look at it every day.\u201d<\/p>\n

To be honest, that\u2019s what most women I know do. No jittery gals here.<\/p>\n

\"\"<\/a>by Kerry Hannon<\/a> is\u00a0a leading expert and strategist on work and jobs, entrepreneurship, personal finance and retirement. Kerry is the author of more than a dozen books, including “Never Too Old to Get Rich,” “Great Jobs for Everyone 50+,” and “Great Pajama Jobs: Your Complete Guide to Working From Home.” Follow her on Twitter @kerryhannon.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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