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Have you ever read John Gray’s book “Men are from Mars, women are from Venus”?

Even if you haven’t, you’ve almost certainly heard about it: it’s one of the most famous essays ever written about the relations between men and women, and its key premise is very simple.

In the book, Martians and Venusians (‘men’ and ‘women’) got along fine when they were aware they come from two different planets. They both accepted and celebrated their differences.

Things got sticky, however, once they came to earth. They forgot they came from two different species and they started to fight: putting an end to the acceptance of their naturally different characteristics.

Neuroscience explains it better    

Let’s take a step into another world: that of neuroscience. Over the years, many studies have enshrined these differences between Martians and Venusians in scientific fact, highlighting how the two use their brains in different ways. Ostensibly, women use the right hemisphere of the brain more than men, and are more inclined to do things in parallel. They’re also - broadly speaking - more inclined towards an emotional response, and have a higher level of empathy.

Conversely, men are more likely to use the right hemisphere of the brain. This means they think more linearly and are more inclined to respond rationally, rather than emotionally, to a given situation. They also tend to engage in a more logical approach to problems.

Although these characteristics have been significantly simplified, it’s no doubt immediately clear that instead of arguing, men and women could actually work together very effectively: their differences in fact complimenting each other. Easier said than done, obviously!

Now, try to apply these differences in biology - and the resulting variances in characteristics - to money and investments.

Studies show that women are more emotional in situations related to money, and are more inclined to feel greater levels of fear and concern. Conversely, men are less likely to experience anxiety, even in the face of stock market fluctuations. Maybe that’s why, beyond the introduction of women to home economics, often the “serious” responsibility of investment still resides mostly with men.

Think about how, on a family level, investment questions often reside with the ‘man of the house’, rather than the woman, whose salary is most likely smaller and is spent on practical matters like housekeeping.

Scaling upwards, consider how many male bankers we read about in newspapers during the period of the Lehman Brothers failure. So much so that Christine Legarde, director of the International Monetary Fund (IMF), reportedly asked herself if things would have gone differently if in their place there had been ‘Lehman Sisters’ instead.

Why not think about creating a Lehman Sisters that in fact complements Lehman Brothers?

Because women are more likely to refrain from financial risk due to their emotional involvement, this actually makes them more likely to think about the long term. They are more likely to make forward thinking, cautious decisions and play the ‘long game’, rather than men, who are more inclined to speculation.

Obviously these are not value judgements; rather, they are reflections of scientific findings.

In this article, it is further demonstrated that these differing motivations in men and women are, in fact, biological. Testosterone, that hormone so closely associated with male virility and masculinity, actually influences their financial decision-making. It leads them to overly optimistic reasoning and heightened aggression; which in turn leads them to impaired bargaining and an inability to compromise.

This trademark ‘over optimism’ is in actual fact a damaging trait, although this might come as a bit of a shock to you. As Behavioural finance (which we discussed in my first article) shows us, this trait causes us to overestimate results and make poor financial decisions because of it.

In this context, women act in a more pragmatic and objective way.

So, as we can’t intervene in biology, why not instead wish for a complementary relationship between men and women in relation to investment decisions; as much in the family microcosm as in the greater stock market?

Women are more cautious, perhaps too much so when left to their own devices, whereas men are more brazen and ready to take risks … if they worked together, instead of in opposition, it could be the perfect recipe for financial and investment success!

And, in order to take even more forward-looking decisions and start saving, let’s rely on Oval Money!    

#BeMoneyWise            

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