3 Common Investment Mistakes that Women Make

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Everyone makes mistakes, and those who invest in the stock market are no exception. Investment experts will tell you that overconfidence leads to overtrading, and overtrading leads to mistakes. These mistakes are usually accompanied by higher fees, which cut into returns, and uncertain profitability that could be based on nothing more substantial than we “fell in love” with a stock for some reason.

If you dig into the information, however, you’ll find these are mistakes usually made by men in investing. Things tend to be a little different with women. Here’s why.

Women invest differently

There’s a shocking revelation: women do things differently than men. This inclination toward a gender bias in our personal decisions doesn’t come as a major surprise in general, but it is worth noting that women go at investing from a different perspective than men. This isn’t to say that women don’t make mistakes; it simply means women tend to make different mistakes when compared to their male counterparts.

Women overstate the risk inherent to the stock market

Women have seen the stock market take its ups and downs over the years, with the occasional dramatic crash here and there. Now in the wake of the Brexit vote, there is even more skepticism among the ladies about the advisability of investing in stocks.

Women tend to fear a “lost it all” scenario in the stock market. But there’s never been a time when the stock market lost all of the value associated with it. There will be ups and downs, but the way to shield your investments from dramatic swings is to diversify your portfolio by including bonds, cash and alternative investments that appeal to you.

Women can be timid about retirement savings

We like to envision spending our golden years with the love of our life beside us, children and grandchildren visiting, and a holiday or two during the year. But reality tells us that women tend to live longer than men by five or more years. While the idea may not be pleasant, we need to make certain we’re prepared to carry on alone. 

This means that women have the opportunity for higher returns on investments over time. This can make the difference in our having enough to last us over our longer life span. Our longevity means we can take on more risk in our investing because we’ll have added time to ride out the rough waters that can come with longer term investments.

We don’t have to know everything

Women will procrastinate, using the excuse of waiting “until I know more about it” to postpone taking control of their retirement investments. It doesn’t hurt to do a bit of reading up on compound interest, or do a bit of internet searching on standard deviations before making investment decisions. 

Waiting until we have the equivalent of a Ph.D. in economics stored in our brains before making an investment can be expensive. Postponing investing, sometimes for years, means missed opportunities that may never come back around again.

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