How Captain Marvel Invests to Beat the Market

Research on why women investors beat males and what you can learn.

Captain Marvel was given cosmic super-powers from the tesseract when the light speed engine exploded but would those super powers help her in other parts of her life.

Brie Larson is coming back to Earth for Avengers Endgame but she probably won’t be doing much investing and while you don’t need cosmic super-powers to invest, there’s evidence to suggest that if she did put a little money in stocks, she’d be better than many investors.

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How Would the Avengers Invest?

Those of you in the community know that I’m a huge nerd for Marvel comics, going all the way back to 1984, right about the time Spidey was getting his new black suit. So with Avengers Endgame coming up, I started thinking, what about the daily lives of the Marvel characters. How would they manage their money, how might they invest.

We know from the blockbuster earlier this year that Captain Carol Danvers was given cosmic powers from the tesseract when the light-speed engine exploded then turned into a Human-Kree hybrid after her blood transfusion with Yon-Rogg, but would that make her a better investor as well?

Are Women Better Investors than Men?

Looking through some research, it turns out she wouldn’t need that superhuman strength to maybe be a superhuman investor. In fact, she might be a better investor just by being a…she.

Research by Fidelity Investments studying eight million client accounts found that women outperformed men by a 0.4% average. Now that doesn’t seem like much but it means almost an extra $7,000 on a $5,000 starting investment over 30 years.

The study also found that women tended to save more to their investments, putting 12.4% of their paycheck to retirement accounts versus just 11.6% saved by men on average. In a separate study by the Warwick School of Business of Finnish investors, women tended to outperform by an even larger 1.2% annually versus their male counterparts.

Why Women are Better Investors

But why is this? Is there a secret unlocked in the XX chromosome or maybe even something that makes us XY guys worse investors? And what can we learn from it to make us all better investors?

Both studies pointed to the female tendency to trade less, buying and selling their stocks less frequently. Men traded in and out of a stock 55% more compared to female investors.

When we look at another Fidelity study that shows the average investor makes 88 trades a year, costing around $880 even on some of the least expensive investing platforms, you can see where this could make a huge difference. In fact, on an 8% annual return, you’d need a portfolio of over $11,000 just for your returns to cover that $880 in fees each year.

Fidelity also found that women are more risk averse in investing, they tend to have less in stocks and more in bonds. Now that doesn’t mean they miss out on growth in stocks. Most people are horribly over-invested in stocks with almost nothing in bonds or real estate, so having just a little less in equities might be a good thing.

How to Be a Better Investor

When we take all this together, it doesn’t sound like rocket science…or something only a cosmic super-hero could understand. There are two ideas I want you to take away from this and that WILL make you a better investor.

First is that saving money on fees is half the battle in investing. Saving just a few hundred a year can turn into tens of thousands over a lifetime of investing. Second is that investing is just as much about what you put in as it is about your returns.

This is something I think is missed in those studies, the fact that women tend to save more of their paycheck for investing. Most people think investing is about getting a huge return but if we look at a chart here on the two parts of your account, what you put in and the money you make on returns. It turns out, the money save is more than half of your account value all the way to 17 years on an 8% annual return. It’s not until almost two decades that the money you make is more than what you put in.

So put money in your investments every single month, even if it’s just $50 a month, that regular investing is going to make all the difference. Stop trading in and out of stocks and save money on those fees.

It’s part of the reason I’m using M1 Finance for our 2019 Stock Market Challenge portfolio, for that no-fee investing option. Saving that $880 a year on the average 88 trades can mean an extra one hundred grand on the money you save and the returns.

Get started on M1 Finance for no-cost investing

We’re doing a whole series on Avengers Endgame investing from Captain Marvel to Iron Man, SpiderMan and the Black Panther. Be sure to click through to Let's Talk Money on YouTube and tap that Subscribe button so you don't miss it!

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