Every so often a headline announces that women are better investors than men citing one or more of four reasons: Women trade less. They churn less. They pay fewer transaction costs. They earn higher risk-adjusted returns.

So women are better investors, right?

Not so fast. Declaring victory for women investors while ignoring why women own less stock turns a gender difference into a gender war and misses the entire point. The better question is not whether women are wiser than men.

The better question is why people with women’s lives end up with less exposure to the stock market, less wealth, and more risk in old age.

The story is not hormones. It is not babies. It is not that women are born timid and men are born bold. The story is income, household structure, debt, power, and the design of a retirement system that treats individuals as if they live alone.

Women Investors Often Make Fewer Costly Mistakes

The strongest evidence shows women often make fewer of the mistakes that hurt long-term returns. Brad Barber and Terrance Odean’s classic study, Boys Will Be Boys, found that men traded 45% more than women. Trading reduced men’s net returns by 2.65 percentage points a year, compared with 1.72 percentage points for women. The explanation was behavioral. Men were overconfident about their ability to pick stocks and time trades. That confidence showed up as movement, and movement showed up as costs.

Fidelity’s 2024 Women And Investing Study adds more evidence finding women less likely than men to describe themselves as aggressive investors and to say they would sell investments and would pull out of the market during volatility. Wells Fargo Advisors’ women and investing research found female-led accounts had less volatility than men’s returns and earn higher risk adjusted returns.

The careful claim is that women appear better on four easy-to-discern measures: they trade less, churn less, pay fewer trading-related costs, and show less overconfident market timing. That matters because every unnecessary trade creates a chance to buy high, sell low, and pay costs along the way. Over........

© Forbes