Why Women Are Dominating in Making Investment Returns
Why Women Are Dominating in Making Investment Returns
Despite how male-dominated the financial industry is, women have the edge for picking investments and earning higher returns. If I asked you to tell me what a successful investor looks like, would you describe a woman? Or would your mind immediately go to the type of people you see on TV -- most often white and male? Well, the data is in, and as it turns out, women are better investors than men. Let's take a closer look at research about women and investing and see how women can get started in the investing space.
Women have the edge
- A 2021 Fidelity study found that women outperform men in investment returns by 0.4%, and an old study from UC Berkeley found that gap was nearly 1%.
- Wells Fargo data added more weight, showing that we earn higher returns on our investments while managing risk more effectively -- the difference in returns between individual investment accounts owned by women vs. men was 0.12%.
What accounts for these differences? Well, that same Wells Fargo study noted that more women identify as conservative or moderate investors than men -- who were more likely to be aggressive investors (55%). Noted voices in the investing space have spoken about women's predisposition to approach the newest investments (like cryptocurrencies) or riskier options (speculative stocks) with a lot more caution. Finally, we also approach market volatility with a calmer reaction -- 51% of us will wait out any market hiccups, vs. 43% of men. These qualities make us more successful investors -- when we actually have the money and ability to invest.
Wanna be an investor?
- Thanks to the persistent gender pay gap, women have less money to invest.
- The gap is slowly shrinking; new data released by the U.S. Census showed that the average is now $0.84 for women for every $1 earned by men (the gap is larger for women of color).
- And the gap also widens when you include seasonal and part-time workers -- they earn an average of just $0.78 per $1.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.