"The stock market is a device for transferring money from the impatient to the patient…"
– Warren Buffett
Warren Buffett invests like a woman
Warren Buffett, the sage of Omaha, has a decidedly feminine investment style.
Yes — you read that correctly. And why wouldn’t he?
Hedge funds run by women have outperformed the industry average by over 20% over the last decade.
Fidelity Investments analysed the investor behaviour of 8 million retail customers and concluded that women make better investors than men. On average, women performed better than men by 0.40% per annum (p.a.).
That may seem like a small difference, but it can make a significant difference in growing wealth over time, especially combined with the fact that women have a higher savings rate as well.
Read more: Breaking the bias on female investors
What traits make women better investors?
Women take a longer-term approach to investing, and tend to think more holistically in terms of financial planning, focusing on goal-based investing rather than just performance.
As Buffett says, his "favourite holding period is forever".
Women in general are more patient and less susceptible to the behavioural mistakes that ruin investment returns — such as overconfidence.
According to Fidelity, men are 35% more likely to put on trades, which means that the brokerage fees will eat away at more of their returns.
Vanguard found that during the financial crisis of 2008, men were much more likely to panic and sell their shares at market lows, which meant big losses and missing the start of the market rally post crisis.
The key to wealth creation is staying the course and minimising costs — and it turns out these are behaviour traits more commonly found in the female form.
To learn more about investing and financial wellness for women, check out our other articles here. Alternatively, explore the Endowus Fin.Lit Academy to understand investment fundamentals, grow your wealth, and get smart with your financial and retirement planning.
To get started with Endowus, follow this link.
This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. It is recommended that you seek financial advice as to the suitability of any investment. Whilst Endowus Singapore Pte. Ltd. (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.
Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.
Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance.
Please note that the above information does not purport to be all-inclusive or to contain all the information that you may need in order to make an informed decision. The information contained herein is not intended, and should not be construed, as legal, tax, regulatory, accounting or financial advice.