Women outperform men by 1.8% when it comes to investment performance, according to a 2018 study by the Warwick Business School.

The study tracked 2 800 investors’ behaviour and investment returns for three years.

It found that women investors not only outperformed the FTSE 100 during that period, they also outshone their male counterparts. While annual returns on investments for men were on average a marginal 0.14% above the performance of the FTSE 100, annual returns on the investment portfolios held by women were 1.94% above it.

Outcome-based approach

Women align with an outcome-based approach to investing, the study found. They tend to take a longer-view perspective of investment.

In general, women seem to have a more considered approach to investing.

“The behavioural qualities displayed by women investors – many of which are aligned to an outcome-based approach to investing – may explain their superior performance,” states the report.

Women tend to take a more long-term perspective, trading less frequently. This possibly means women are investing more to support their financial goals, whereas men are attracted to what they see as the thrill of investing.

The case for ‘staying invested’ has proven to be especially strong during times of financial market uncertainty and high volatility. This is because volatile markets increase the risk of buying and selling at the wrong time.

Taking a lesson from steady investors

By trying to time the market, investors therefore risk missing top performing days because it is often intuitive to buy when prices are low, but difficult or even impossible to correctly predict the best time to invest.

In fact, the research has shown that investors who stayed the course over a twenty-year period would have received nearly double the returns than their peers who missed the top 25 performing days over the past two decades.

Five investment tips to help you stay on course –

1. Diversify

Investing money in various multi-asset funds with diverse strategies is the surest way to earn superior returns over time. As such, choosing a few balanced funds or CPI +5% funds will go a long way.

If you’re still not sure, it’s best to speak to a professional Financial Advisor.

2. Compound your interest

The power of compounding is really the eighth wonder of the world, so ensure that you grow the money you save by investing it into a compound interest-bearing account.

3. Pay off your bond

“Owning the house that you live in is the best risk-adjusted investment you will ever make” – Florbela Yates, head of Momentum Investment Consulting,

So, paying a little bit extra on your bond every month is a great investment, but taking the extra money out of your bond and spending it on consumer goods is very bad.

4. Avoid the switch itch

Investors are 2.5 times more likely to switch funds as a result of their current fund performing poorly, than as a result of another fund performing exceptionally well.

“Even when the markets get rocky, try stick with your investment strategy and portfolio choice. There will be times when you have the urge to change investment funds, but don’t chop and change,” says Yates.

5. Be tax savvy

Retirement annuities and pension funds are tax-efficient investments.

“Maximise your tax benefits (and cost benefits) through institutional (employer provided) arrangements. With any excess, you can take out a retail investment product, but group/employer provided products give you the benefit of a discount through economies of scale,” advises Yates.

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Contact Salvo Capital today we’ll put a long-term financial plan in place to help you prioritise your goals and channel your investments towards those goals that are really important to you, and help you stick to the plan.

 

source : fin24.com