As Women’s History Month comes to a close, I commend women for being more likely than men to take a buy-and-hold approach with their investments. Investors who trade frequently are less likely to earn high long-term returns than those who simply buy and hold. A Fidelity Investments report (5/18/17) revealed that men are 35% more likely to make short-term trades than women and women earn higher returns than men. As the stock market rises over time, those who trade in and out often miss some important periods that account for a big part of a year’s gains. According to Schwab Center for Financial Research, a buy-and-hold investor would have earned 7.8% annually in large-cap stocks between 1996 and 2011 but missing the best 30 days for the markets would have eliminated all your returns. 2020 is a case in point where a buy-and-hold, 50-year-old investor earned 14.79% in Vanguard’s Target Retirement 2035 Fund while many investment advisers gave their clients far inferior returns as they believed they could “navigate volatile times” as they often claim they can do. As in many aspects of life, men learn yet another lesson from women.
Larry Pike, CFA
Client Priority Financial Advisors LLC