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Invest | Women in Investing: A Comprehensive Guide for 2024

Women in Investing: A Comprehensive Guide for 2024

women in investing

It is no surprise that women are lagging behind men financially. And one of the major reasons for that is the gender disparity when it comes to investing. Women are recorded to invest significantly less than men. 

However, despite gender differences, women’s wealth is growing and so are their investments. According to a study by Fidelity, in 2021, around 67% of women were investing outside their retirement accounts. In 2018, this number was just 44%. 

Moreover, the pandemic proved to be a serious hurdle in women's employment as the COVID-19 crisis wiped out 4.2% of global women's employment, compared to 3% of men’s employment. Despite these setbacks, women are resilient and the global share of women’s wealth has increased significantly from $20 trillion in 2018 to $24 trillion in 2020. 

While women may have faced many major setbacks, they hold massive potential and could bring about a paradigm shift in the investment landscape in the future. 

How Many Women Are Investing?

Despite popular belief, the number of women investors is on the rise. 

As mentioned above, according to a study by Fidelity, 67% of women are investing outside of their retirement accounts, compared to 44% in 2018. 

The same study also shows that the COVID-19 pandemic played a huge role in this surge, with 51% of women saying they started investing when the pandemic started. 42% of the women stated that they now have more money to invest since the start of the pandemic. 

However, the Fidelity study also showed that only 33% of women see themselves as investors. 

According to a study by FinanceBuzz, about 34% of women in the US haven’t taken the plunge on investing, compared to 24% of men. 

Are Women Better Investors?

Although women invest less than men, they are tremendously good at it. Today, women control more investable capital, voting shares of stock, and corporate board seats than men. According to a consulting firm Spencer Stuart, women held 32% of S&P 500 company board seats. 

  • A 2021 analysis by Fidelity of over 5 million customer accounts stated that women outperform men by an average of 40 basis points annually, from 2011-2020.
  • A study by the University of California found that men traded 45% more than women did. When it comes to sectors like finance and investing, men are much more overconfident than women. 
  • A Money Crashers survey in 2019 found that women only invest in companies that align with their values. A whopping 49% of women stated that a company’s social mission is extremely important to them, compared to 29% of men. 
  • An investor survey conducted by Wells Fargo stated that women tend to be more disciplined when it comes to investing, allowing them to achieve better returns. 
  • The same study by Wells Fargo also stated that women tend to take fewer risks than men while achieving higher returns. 

Do Women Invest Less Than Men?

It is a known fact that women do invest less than men but what are the actual numbers?

In the UK, 29% of women reported trading stocks online, compared to 47% of men. 

These statistics are similar worldwide. According to a survey by NerdWallet, 48% of women currently have money invested in the stock market, compared to 66% of men. 

This is largely because women do not view investing as a financial priority. According to a survey by YouGov, only 55% of women deem investing a priority, compared to 62% of men. 

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Do Women Spend Less Time Investing Than Men?

According to a study by the University of California, men traded 45% more than women did, back in the 1990s. However, excessive trading also resulted in reduced men’s net returns by 2.65% per year, compared to 1.72% for women. 

However, this is still the case. In 2020, a study by Vanguard revealed that 50% of women are less likely than men to trade actively. 

Moreover, a study by FinanceBuzz also showed that only 41% of women check their investment portfolios once a week, compared to 60% of men. 

Women Lack Confidence When it Comes to Investing

A study by BNY Mellon revealed that only 1 in 10 women believed they fully understood investing. 

The same study showed that about 28% of women felt confident about investing. 

More than 45% of women think the stock market is too risky. 

A 2021 survey by Fidelity showed that only 33% of women reported that they felt confident handling their investments. 

A study by NerdWallet showed that 29% of women reported feeling anxious about their investments, compared to 22% of men. 

Women’s Confidence Comes With Age

While women do feel underconfident when it comes to investing, the good news is that with age, this self-perception changes. 

46% of millennial women feel they can handle their own investments, compared to 52% of GenX women, 54% of female baby boomers, and 62% of the silent generation. 

62% of women reported they are confident they will be able to save for retirement. However, only 43% of women stated that they have actually planned for retirement, compared to 54% of men. 

What Are the Best Ways for Women to Invest?

A 2021 Fidelity survey found that 64% of women would like to be more financially active and around 65% of women would be more likely to invest if they had a clear and concise way to do so. 

  • The same study by Fidelity also found that 77% of women believe they would invest more if they had a financial advisor to help them. This is true as investing is a particularly risky venture and women tend to be more risk-averse. The best place to start is by consulting your company’s 401(k) advisor. 
  • If you don’t prefer face-to-face interactions and would like an online solution, you can consult a robo-advisor. These financial services can create a whole portfolio for you based on your risk tolerance, investment goals, and time horizon. 
  • You can also start by yourself by taking baby steps. Start by investing in one or two ETFs or mutual funds. Make sure to set up a retirement plan as it will help you in the future. 

Women Prioritise Long-Term Investments

A study conducted by N26 revealed that only 23% of women European investors prioritized short-term gains, compared to 43% of women investors who prioritized long-term investments

Moreover, women also prioritise value for money when choosing investments. 

The same study by N26 showed that commission fees or interest rates play a major role in finalizing women’s investment decisions. On the other hand, men prioritized long-term yields. 

FinanceBuzz also reported that low management fees and expense ratios were the top priorities for women when choosing an investment. 

Are Women Better Investors Than Men?

While women invest significantly less than their male counterparts, when they do, they outperform them. 

A study by Warwick Business School showed that female investors outperformed the FTSE 100, and their male counterparts over three years. 

Men’s investments outperformed the FTSE 100 by 0.14% whereas women’s investments outperformed the FTSE 100 by 1.94%. 

If this performance will be replicated over 30 years, women will have a 25% bigger portfolio than men. 

Despite men trading 45% more than women, they had a 2.65% per annum reduction in their net returns. 

Why are Women Better Investors Than Men?

There are three major reasons why women invest less but still do significantly better than men. 

  • They are more likely to have naturally diverse portfolios: A higher percentage of women than men invest most of their portfolios in funds. Since they are invested in funds, the fund managers invest in a myriad of different companies, providing diversification and risk mitigation. 
  • They tend to hold less risky investments: Studies show that women are less likely to invest in riskier assets like individual stocks of small companies. Due to this women are 50% less likely to suffer a loss. 
  • They are more likely to invest for the long term: Women tend to prioritise long-term investments and do not trade frequently. 

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Iconic Female Investors 

Here are some of the most iconic female investors who have revolutionised the financing industry. 

  • Geraldine Weiss: Weiss is the first woman to launch a successful investment newsletter. This venture generated an average stock market gain of 11.8% from 1986 to 2022, beating the Wilshire 5000 Total Market Index. 
  • Muriel Siebert: Siebert was known as the “First Woman of Finance,” as she became the first woman to become a member of the New York Stock Exchange(NYSE). She is also the first woman superintendent of banking for New York State. 
  • Abby Joseph Cohen: She is a retired partner for Goldman Sachs and a professor. Cohen made a name for herself by predicting the bull market of the 1990s and is one of the top market analysts in the country. 
  • Mellody Hobson: She was named Fortune’s most influential woman. Hobson has served on the board of JP Morgan Chase and Starbucks. She currently serves as President and co-CEO of Ariel Investments. 
  • Abigail Johnson: She is a billionaire and the CEO of Fidelity Investments

Final Words

Seeing all the data and statistics related to women and investing, it is clear that the gender investing gap still exists. The gender pay gap might be a reason for this, but women not investing as men is a major problem that should be addressed. 

In the current scenario, it will take more than 200 years to bridge the financial gender gap. Women have the power to change the paradigm of the financial industry. In fact, investing is one of the best ways for women to seek financial independence. The data suggests that it's time to smash the stereotypes that women are bad investors. This is not true as when women invest they outperform men. 

Frequently Asked Questions(FAQs)

Q. What are the best investments for women?

Ans. According to studies, women tend to prioritise long-term investments. While there are many options to choose from, a low-cost S$P 500 index fund is the best. It allows investors to invest in the largest 500 companies in the United States and offers over 10% annual returns over the long term. 

Q. Who is the most famous women investor?

Ans. There are many popular female investors in the world as women usually outperform men in the stock market. Some popular female investors are Geraldine Weiss, Cathie Wood, Mellody Hobson, and Muriel Siebert. 

Q. Why is investing important for women?

Ans. Investing is crucial because it is one of the best ways to build wealth and save for retirement, especially for women who are seeking financial independence. Saving alone will not help you reach your financial goals. Moreover, investing helps individuals maintain their purchasing power and outpace inflation.