Money Like A Woman means playing the long game

Scroll social media for more than five minutes, and you’ll probably come away convinced that you need to start making trades before you take your first sip of coffee in the morning in order to be a successful investor… One day, there’s a hot stock that’s supposedly set to double. The next day, there are dire warnings of a market crash around the corner. It’s all too easy to believe that if you’re not constantly buying and selling, you’re going to be left behind.

It’s exhausting. It’s also a bunch of big, fat lies. The reality is that most successful investors are often the ones who simply stay the course — the “boring” ones who set it and forget it and let their money grow over time while they go on living life. And according to study after study, nobody understands this better than women.

A Fidelity analysis of more than five million customer accounts found that women outperformed men by an average of 0.4 percentage points annually over a ten-year period.  Why? Women trade less, and they tend to stay invested through market cycles instead of jumping in and out.  Women are also less likely to make emotionally-driven decisions during periods of market volatility. A Vanguard study found that women traded about 30% less frequently than men among defined-contribution retirement plan participants.  That’s significant.

In other words, women don’t outperform because they’re taking bigger swings — they outperform precisely because they’re taking fewer unnecessary ones. It’s patience, discipline, and a long-term mindset that decades of investing research have consistently shown can help build real wealth.

Patience Is A Virtue… But It’s Also A Strategy

If investing were simply about math, we’d all have Warren Buffett-like discipline. But money is rarely just about the numbers.

“Money is a very emotional issue,” says Betsy Hutchins, Certified Financial Planner and owner of Forward Financial Planning, a wealth management firm in Germantown, Tennessee. One of the biggest traps in investing is feeling like you’re missing out.

“It is hard not to run after the next shiny thing when all media outlets are screaming about the next shiny thing,” Hutchins says. The problem is that every time you abandon a thoughtful investment strategy to chase whatever’s trending, you’re betting that you know more than the market. Most of us don’t.

This is the essence of what makes patience a strategy: It’s choosing to trust your diversified, long-term plan over the excitement of whatever everyone else seems to be talking about. It’s resisting the urge to constantly tinker with your portfolio in pursuit of a chance at a quicker path to wealth.

And this is exactly where women have an edge: “In general, women are more patient than men, which often leads to better investing outcomes,” Hutchins says.

Essentially, wanting more from your money doesn’t mean doing more with your money.

Fear Can Be Very (Very!) Expensive

Of course, patience is only one part of this equation. Keeping a cool head during stressful times is also incredibly important. That’s because market downturns have a way of making even the smartest investors second guess themselves. The temptation to preserve your money (rather than waiting an unknown period of time for a market rebound) is incredibly strong, Hutchins cautions.

“I’ve had clients wanting to sell everything they have invested, and move it all to cash,” she says. “This is a horrible idea. It almost always leads to long-term damage in your portfolio. Do not do it! Because every time the market has gone down over the last 100 years, it has rebounded to new highs no one could have predicted.”

No, history is certainly not a guarantee of future returns, but it does offer an important perspective: Every major market decline over the past century has eventually been followed by recovery, and the people who saw the upside weren’t necessarily the smartest investors — they were just the ones who stayed invested long enough to reap the benefits.

Making A Plan That Sticks

When you have a long-term investment plan — which means you know exactly why you’re invested, how your portfolio is allocated, and what you’re working toward- it’s much easier to ride out short-term volatility without feeling like you have to react.

Hutchins says she often helps clients navigate uncertain markets by continually bringing conversations back to their long-term goals. That’s because when you’re able to focus on your bigger picture (rather than just the latest negative headlines), it’s much easier to resist the temptation to be reactive.

Another important piece of the puzzle is to build your long-term plan when the markets are doing well, “rather than wait until the next downturn,” says Skee Orr, Certified Financial Planner and Founder of Kinetic Wealth financial planning in Knoxville, TN. Essentially, build your strategy plan when you’re thinking clearly — then trust yourself enough to stick with it.

Confidence with investing doesn’t come from knowing what the market will do next. It comes from knowing what you will do next.

Speaking of which…

The Power of Doing Nothing

“Doing nothing” may sound lazy, but in a financial context, it actually requires tremendous discipline.

Think about it: Selling after the market drops feels productive. Buying into the latest hot investment feels proactive. Constantly checking your accounts feels responsible… But feelings are not the same thing as strategy.

“The secret is, there is no secret,” Hutchins says. “Stay invested in a diversified, low-cost manner for the long term.”

The habits of successful long-term investors simply aren’t glamorous, Orr says. “They’re usually quiet and consistent. They resist the pull to react to every headline or market movement, they diversify by not putting all their confidence (or their capital) into one idea, and they seek trustworthy guidance from someone who is honest, competent, and truly in their corner. None of these habits require a finance degree — they require intention, and a little help staying the course.”

TL;DR: Playing the Long Game Pays Off

Successful investing doesn’t require constantly buying, selling, or chasing the next hot stock. Trading less frequently can actually yield better results. A diversified, long-term investment plan, (wherein you stay invested through periods of market volatility, and resist making emotional decisions) is the way to go.  When it comes to building wealth, having patience doesn’t mean you’re being passive — it means you have a strategy!