Mary Holm is on holiday until January 26. While she's away, we're publishing edited extracts from her new book — Rich Enough? A Laid-Back Guide for Every Kiwi.
Vive la difference - how men and women invest. The first thing to say here is that there are many exceptions to the "rules".
However, I'm including this because it might draw your attention to weaknesses in the way you invest. Also, it's interesting.
Let's start with a couple of quizzes. The first is about gender and goal setting.
Which gender is more likely to achieve their goals if:
1. They set a specific rather than vague goal?
2. They told friends and family about it at the start?
3. They were encouraged not to give up if they lapsed - for example, they went on a chocolate binge when on a diet?
4. They focused on rewards associated with achieving the goal?
Answers in a minute.
Next we have a Colmar Brunton survey, in which they asked people: "Which of the following is most important to you when making an investment decision?"
There were strong gender biases in the answers to 2, 3 and 4. Can you guess them?
1. Being able to access money whenever you want.
2. Maintaining all the money originally invested.
3. Earning a reliable return - value of investment increases steadily.
4. Earning the best return overall - even if investment value changes over time.
5. Doubling your money in 10 years.
Answers: On gender and goal setting, women are more likely to achieve their goals if they do 2 and 3, and men are more likely to succeed if they do 1 and 4, according to quirkology.com/UK.
In the survey, women were more likely to say 2, and men were more likely to say 3 or 4. (Men and women were about equally likely to say 1 or 5.)
Much other research has come up with two basic gender differences in investment style - men are more likely to prefer higher-risk investments, and men trade more.
We'll look at risk first.
While higher-risk investing tends to bring in higher returns, sometimes men go for too much risk.
Women, on the other hand, tend to take too little risk.
In an ANZ survey, people were asked, "Are you confident you'll reach your retirement savings goal?"
About 55 per cent of men said yes, but only 41 per cent of women said yes.
This is probably partly because women are more likely to take time out from paid work and are paid less, but it's probably also because women are more likely to be in investments with lower returns.
Also, they might simply take less interest.
Research by the Financial Markets Authority found young women "are the least engaged with their KiwiSaver materials and they are least likely to take action" to get more out of KiwiSaver.
Conclusion: Women should think hard about whether they should increase their investment risk.
And men should consider reducing their risk - by diversifying; using higher risk investments only for the long haul, and keeping their borrowing low (men tend to have higher debt).
On trading frequency, research shows that women tend to buy and hold investments, while men are more likely to trade - usually to their detriment.
An example of men's counter-productive trading: A study of 2.7 million investors during the global financial crisis in 2007-08 found that men were much more likely than women to sell their shares at market lows.
Why do men trade more frequently? Studies have found that frequent traders tend to believe they are the exception - they will do well, although most of them don't.
It's probably significant to note here that more compulsive gamblers are male than female.
What explains the gender differences? If you read through the literature on this, a few ideas keep popping up.
Women, some research shows, are more likely to seek financial help and advice.
They're more patient, and more likely to set goals. That could explain why they're less likely to trade impulsively.
Men tend to be more competitive, and to see money as a way of keeping score.
If these differences ring true for you and your partner - regardless of who has which characteristics - it's probably a good idea for you to make financial decisions together.
Each of you can benefit from the other's strengths, and counteract the other's flaws.
But if you can't agree on a strategy, maybe you could each be in charge of 50 per cent of your investments, so you have a range of risks and styles.
WHO GETS SCAMMED?
There are gender patterns in scam victims. Australian research on 80 telemarketing scams found that 90 per cent of the victims were men.
And the Commission for Financial Capability says that UK research "found that older, wealthier, risk-taking men are the most likely targets for "share fraud", when worthless or unsellable company shares are on offer. Women are more affected by "recovery fraud", when scammers offer to recover funds or a lost investment in exchange for a fee.'
It adds, "the UK study demonstrated that the more financially sophisticated a person is, the more likely they are to be victimised, since fraudsters prey on investors' overconfidence." Many people of both genders don't like to tell others they are victims. So scams are more widespread than we realise.