How Men and Women Invest – Is There Really a Difference?

Discussions about the differences between women and men have persisted since Adam woke up one morning to find himself shy one rib. From Shakespeare to Hepburn and Tracy to Hanks and Ryan, we find no end of fascination in the quirks and proclivities of our respective genders.

Twenty-four years ago, John Gray wrote an insightful bestseller that strove to make the universal distinction that Men Are from Mars, Women Are from Venus.  In 2013, The Economist published an engaging neurological account [free registration required] of how men and women differ.  Not to allow medical science the last word, now Black Rock Investment Institute Strategist Nelli Oster is telling us how men and women diverge when it comes to investing, and how these decision-making differences can affect our portfolios.

Women, perhaps unsurprisingly, are focused on longer-term, non-monetary goals – security, independence and the quality of theirs and their families’ lives.  Men, on the other hand, are more concerned about the track records of their investments.  Women are more thorough and careful about their investments.  Accordingly, they do more research before committing their money.

And, in a parallel to the time-honored cliché about men’s refusal to stop and ask for directions, Oster says the same behavior applies with respect to investing.  Women are more prone to seeking out help, while men like to jump in.

As you might imagine, these differences play themselves out when women too often pass on potentially profitable but risky opportunities, while men too often give in to impulse in our investment decisions. We men also don’t know how to cut our losses.

These stark gender differences, according to a May 22 Washington Post article, also manifest themselves in how men and women prepare for retirement, not to mention how they actually live after exiting the workforce.  Women, says the Post, must negotiate longer life expectancies with lower average wages throughout their careers, plus lower lifetime earnings because they tend to be the ones needing time off to care for their family member, and to have babies.

Presumably because we’re more able to focus on our own needs, men start planning earlier for retirement.  Twenty-two percent of men begin planning before they’re thirty, whereas only twelve percent of women begin planning that early.

These are not arbitrarily cited differences.  The Department of Labor not only recognizes them, but urges women to think carefully about their consequences when planning their retirement.  The DOL points out that, “By and large, women invest more conservatively than men. Choose carefully where you put your money and learn how to improve your investment returns.” In less PC terms, women need to dare more.

We can choose to dismiss these differences as trivial, or we can use them as indicators in evaluating our own investment behavior.  With each investment – especially when our retirement is at stake – we need to ask if we’re being too careful or too impulsive; whether we’ve done enough research before making a financial commitment; and how each choice plays out over the long haul.

Finally, I’m not prepared to say that a particular stock or mutual fund is more appropriate for men than for women.  But there is one thing I do know: A persistent and disciplined investment in physical gold, particularly these days, is necessary and appropriate for both men and women.  This is particularly true as we close in on retirement and need to focus on preserving the buying power of our dollars and dollar-denominated assets like stocks, bonds and mutual funds.

When experts say the shiny metal holds its value for the long term, they’re not kidding; a 5,000-year track record of wealth preservation is hard to beat.  Gold preserves wealth way beyond the span in which paper assets can become valueless. (How much are your Blockbuster Video or Bear Stearns shares worth?)

What it comes down to isn’t making men think more like women, or women more like men.  What we all need to start to do is invest defensively, like wealthy people do and have done for centuries.