IT is easy to get sucked in to stereotyping while thinking about the differences between men and women when investing, writes James Rainbow, an investment manager at wealth management firm, Brewin Dolphin in Newcastle.

That men are confident and short term, while women are risk-averse and long term are among the popular conceptions. As with any urban myth, however, the truth is generally far more complicated.

James Rainbow, Investment Manager at Brewin Dolphin in Newcastle, believes that while there can be differences between the sexes, they are not necessarily to do with gender: “Most economic decisions have more to do with environmental factors,” he says.

Research among Norwegian school children found that attitudes to risk were more closely correlated to socio-economic backgrounds than sex. “Boys and girls of similar socio-economic backgrounds displayed no difference in attitude to risk. The higher social class they were, and therefore probably wealthier, the more risks they took, regardless of gender.”

Merrill Lynch research found the key influence on investor behaviour was men and women’s reported level of financial knowledge. It said that women were far more likely than men to say they had lower levels of financial knowledge.

However, what people say they know, and how much they actually know can be two very different matters. The research pointed to an academic study of mutual fund investors, which indicated men seemed to take more risks than women. Yet when the results were adjusted to take investing knowledge into account, the willingness of women to take risks was closer to that of men. In other words, as the difference in the knowledge level between men and women investors narrowed, so did the presumed gender difference about risk.

Rather than over-analysing the differences between men and women, therefore, it is perhaps more productive to assess what we can learn from each other to help them become more successful investors. In general, men tend to be more confident than women. The risk is that confidence becomes over-confidence and that risk aversion leads to being over-timid.”

Similarly, the supposedly female characteristic of a lack of risk appetite can be detrimental in a young person saving for retirement; as retirement approaches, however, the risk in the portfolio should be reduced to safeguard the value of the investment.

Sarah Pennells, editor of the money website SavvyWoman, says: “There’s lots of research that shows when women do invest, they do as well as men – if not better. Sometimes men chop and change their investments too often and rack up higher costs than they should. Some men can also take on too much risk – especially when it comes to alternative or unregulated investments – and don’t tend to weigh up the downsides before parting with their money.”

Better still is to recognise that everyone has bias, and take steps to overcome it. If it is your own money, you tend to be a bit more risk averse anyway. But part of the advantage of professional advice is that you can take the emotions out by giving the decision-making over to someone else, who will look at things more rationally.

James Rainbow is an Investment Manager at wealth management firm, Brewin Dolphin in Newcastle. For more information, please visit brewin.co.uk/Newcastle or follow us on Twitter @BrewinNewcastle

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin Ltd. No Director, representative or employee of Brewin Dolphin Ltd accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change.