How do gender and age affect investments?

What are the differences between men and women when it comes to investing?

We start with an experiment.

12 male and 12 female participants took part in the experiment, where scientists showed them 96 neutral to highly negative images and recorded their brain activity.

Three weeks later, they were shown 144 images, including the previous 96.

What do you think happened? Scientists found that women have better memory for highly emotional images compared to men.

Why is there such a difference? Because the brain structures of men and women are different.

Firstly, women more often use the left amygdala, while men more often use the right. This indicates that women are more sensitive to emotional stimuli, while men tend to use visual and perceptual cues.

In addition, women's brains are more active in other regions compared to men's.

How are these findings related to investments?

This means that women have a more lasting impression of their failed investment experiences.

This is also why men and women have different attitudes when facing investment risks. In many investment decisions, women tend to be more risk-averse than men.

Professor Rachel Croson and Uri Gneezy have conducted relevant research and made the following findings.

For example, in asset allocation of retirement plans, single women tend to prefer low-risk strategies more than single men. Compared to married men, married women have a lower proportion of investment in stocks.

However, is the brain the sole factor causing differences in investment risk attitudes? Actually not!

A hormone called testosterone may also play a role in this. Testosterone is a male hormone, but females also have small amounts of testosterone.

How does testosterone affect our bodies and investments? For example, the higher the testosterone level, the more prominent the masculine facial features.

One study found that masculine facial features are positively correlated with financial fraud, insider trading, and options backdating.

Other studies have found that in fraternal twins, females have higher testosterone levels before birth than other females.

Compared to female siblings in same-sex twins, females in fraternal twins trade more frequently and hold more high-risk stocks.

Environmental factors may also play an important role.

For example, the social environment encourages men to take risks more often, while expecting women to cooperate and collaborate.

However, upon further exploration, you will find that as age increases, men seem to become more gentle and cautious? Yes, age is another factor that influences risk attitude.

Young people may be more concerned about capital growth, while older individuals tend to prefer stable returns. However, aging is inevitable, especially cognitive decline.

What happens as we age? Our reactions slow down, memory deteriorates, information processing ability decreases, and our minds become less flexible and imaginative.

A study on people aged 50 and above has drawn the following conclusion.

Cognitive ability is related to an individual's willingness to take risks.

Furthermore, the connection between age and risk attitude is determined by cognitive ability in 85% of cases.

As we age, the decline in cognitive ability weakens our investment capacity, making us more inclined towards risk aversion.

However, to some extent, the decline in cognitive ability is not absolutely inevitable!

Just like exercising muscles, we can slow down the decline in cognitive ability through training.

Research has found that elderly individuals who participate in various brain training games show better improvements in fluid intelligence, such as memory and reasoning abilities.

Moreover, elderly individuals with higher levels of education are better able to cope with the natural decline in brain function.

So don't worry, there are always ways to help us.

In this video, we discuss how gender and age can influence attitudes towards investment risk.

However, it is important to note that these studies summarize the situations of the majority of people and may not necessarily be accurate for individuals.

However, we can look at ourselves from a new perspective.

You can ask yourself three questions.

Do you dislike risk or do you enjoy taking risks?

How will past investment failures affect you?

Do you think your cognitive abilities are improving or declining?

To improve your investment success rate, start by understanding yourself.