Women’s confidence increases with age
The good news is that while women lack confidence in investing, this self-perception changes with age. 46% of millennial women feel equipped to handle investments, which is 52% of Gen X women, 54% female baby boomers, and 62% of women of the silent generation.
62% of women are confident they’re able to save for retirement. But perhaps it’s all too good to be true, because according to Motley Fool, only 43% of women feel they have planned for retirement well, compared to 54% of men.
Source: Motley Fool
Women are investing earlier than men
Whilst countless research points to the fact that women invest and trade less frequently than men, FT Advisor found that UK women start investing at an average age of 32, three years younger than their male counterparts who start at 35.
This finding is made more intriguing, when in 2022, Fidelity found that 36% of older women (age 36 and above) said that their biggest financial mistake was “waiting too long to start saving for retirement.”
Source: FT Advisor, Fidelity
Demographic differences in female investors
According to the 2021 Fidelity study, three fourths (71%) were millennials (ages 25-40), 67% of Gen X (ages 41-60) and 62% of boomers (ages 57-75) .
It’s younger women who are closing the investment gender gap.
However, there exist significant differences amongst female racial groups, with black women lagging the most behind.
59% don’t have any cash in investments, compared to 48% of Hispanic women and 34% of white women, reveals a survey conducted by Momentive.
Women favour advice from others
When seeking financial advice, FinanceBuzz finds that women are more likely to seek investment knowledge from other people whilst more men seek knowledge through the internet.
The same survey found that 18% of women developed their knowledge around investing from their partners. Meanwhile, only 7% of men said the same.
Source: FinanceBuzz
Women prioritise long-term security over short-term gains
A study of European investors conducted by N26, revealed that only 23% of women prioritised short-term wealth gains, compared to 43% who put long-term wealth as their investment priority.
The same study found that women investors say they want to increase their investments over the next year.
Source: N26
Women favour less risk investments than men
Capital revealed that 43% of female traders set up stop-loss orders on over half of their trades, compared to 35% of men. A stop-loss is often used as a risk management tool to limit losses.
Women are also better at diversifying than their male counterparts, which serves as a strategy to protect their money regardless of market conditions, according to Fidelity.
This finding holds true for the FCA’s Financial Lives survey, which found that women generally tend to favour less risky investments overall.
Source: Capital, Fidelity, FCA
Women prioritise value over money
Women prioritise value for money when handpicking investments
In N26’s survey of European women, commission fees or attractive interest rates play a leading role in determining womens’ investment choices. Men, on the other hand, overwhelmingly prioritise long-term yields.
This rings true for FinanceBuzz who found that low management fees and/or expense ratios were one of the top priorities for women when handpicking an investment platform to trade with.
Source: N26, FinanceBuzz
Women believe you can invest with less
According to FinanceBuzz found that women are actually more likely to believe you can start investing with less than $1,000 – such as $50 or less.
Source: FinanceBuzz
Women prioritise investments with impact
More women (71%) make investing decisions with wider sustainability considerations in mind compared to 58% of men, according to a UBS survey.
Flipping it the other way round, a 2020 survey by Money Crashers found that only 19% of women said they would invest in a company that was not considered socially responsible, compared to 51% of men.
When looking specifically at women between the ages 30 and 40, 61% of women handpick their investments based on their social or environmental impact, according to research conducted by Simple.
So, the shift in financial power suggests the future of socially responsible investing is in female hands.
Source: UBS, Money Crashers, RBC Wealth Management, Simple
Women are better investors than men
Whilst women are not as frequent investors than their male peers, research shows that when they do, they outperform them.
Warwick Business School revealed that female investors outperformed the FTSE 100, but also their male counterparts over three years. The men’s investments outperformed the FTSE 100 by 0.14%. Whereas the women’s investments outperformed the FTSE 100 by 1.94%, that’s 1.80% higher than the men. If this performance was replicated over 30 years, women would end up with a 25% bigger portfolio.
This picture held true some years before. Despite men trading 45% more than women, the University of Berkeley revealed that men had a reduction in net returns of 2.65% per annum.
Source: University of Berkeley, Warwick Business School
Why women are better investors than men
So what’s the secret? Hargreaves Lansdown found three reasons why women are investment naturals…
- Women are more likely to have naturally diverse portfolios…
A higher percentage of women, than men, have most or all of their portfolios invested in funds. Because they’re invested in funds, the fund managers invest in lots of different companies, diversifying the investment and spreading their risk.
- Women tend to hold less risky investments…
The study showed that women were less likely to invest in riskier assets such as single company shares of small companies. Because of this, women were 50% less likely to experience a loss of 30% or more in this period.
- Women are more likely to ‘buy and hold’…
As we mentioned earlier, women traded less than men and were more likely to invest for the long term. It also means that they do not incur trading costs.
Source: Hargreaves Lansdown
More women are investing than ever before
According to the Fidelity’s Money Moves Study, 50% of young women had either started investing in the past six months or plan to in the next six months.
The same study found that 37% of young women believe it’s important to just start investing with any amount, with 57% of older women agreeing.
48% of women took the plunge into the stock market in the past two years, according to a 2022 global survey of 9,500 female investors conducted by eToro.
A 2020 McKinsey report showed that women became more financially savvy back in 2020, when 30% more married women reported taking the reins on investment decisions than between 2014 and 2019.
On top of all of that, 20% poured their investments into new asset classes during Covid-19, revealing that they’re more prone to diversification and expanding their holdings, finds Motley Fool.
Source: Fidelity, eToro, McKinsey, Motley Fool
What would happen if more women invested?
As mentioned earlier, a UK study by Hargreaves and Lansdown revealed that women’s investment portfolio came out on top by 0.8%. Whilst this may not sound like a lot, imagine if this was replicated over 30 years. Women would have a portfolio 25% higher than mens!
A 2021 study by BNY Mellon showed that if women invested at the same rate as men, there would be an extra $3.22 trillion of assets under management from private individuals.
Source: BNY Mellon, Hargreaves Lansdown
Why does the gender investing gap matter?
Diving head first into all the data surrounding women and investing, the picture is crystal clear – the gender investing gap exists. We all know that women already lag behind men professionally with regards to salaries, but women not investing as much as men isn’t helping.
In a climate where it will currently take 267 years to close the financial gender gap, women have the power to change the tides of financial power. In fact, investing is one of the best ways for women to grow their money pot over time and establish the financial freedom they deserve.
The data suggests we need to smash the stereotypes that women are not good investors.This simply isn't true, as women outperform men when they do dabble in the stock market. With increasing rates around inflation and the cost of living crisis hitting the headlines, money sitting in a bank account is counterproductive, but more importantly, costly.
