What are the biggest differences between men and women in financial planning? While the perception of women as hesitant in investing persists, longitudinal data indicates that if you had to pick who to emulate in investing, it would definitely be a woman. Millenial women are investing at higher rates than ever before, and increasing numbers are seeking out education opportunities to enhance their ability to enjoy a secure future.
1. Women’s portfolio’s outperform men’s
The higher returns for women’s portfolios are due, in part, to a “stay the course” mentality during market fluctuations. Over time, .4% has a significant impact on performance. In fact, the long-term perspective is what enables women to make changes with caution, which enables them to keep their money in the market longer. Rather than being risk-averse, women are more likely to require additional information prior to making a move, which benefits portfolio performance.
2. Women invest more of their paychecks than men.
Women set aside more money in employer-defined plans (.4%), and in outside IRA and brokerage accounts (.8%). Once women begin saving and investing for retirement, they commit more of their current dollars to that effort. Given that women outlive men, the higher savings and investing rates are a huge positive. The higher saving and investing rates are consistent across all salary levels.
3. Women use their values as a source of strength in decision-making.
Values inspire action for women. Women take a holistic approach to finances and investing. Notably, women’s interest in investing is intimately connected to how it benefits their family. Given the focus on values, it’s not surprising that women have higher expectations than men for the companies in which they invest.
“Women make more values-based decisions for themselves and their families, rather than just going for the bottom line. When you bring values into the conversation, it makes all the difference.”
JEANETTE SCHNEIDER, SENIOR VICE PRESIDENT & PRIVATE, CLIENT ADVISOR, U.S. TRUST
Sources
Women and Financial Wellness: Beyond the Bottom Line, A Meryl study conducted with Age Wave – 2018.
Fidelity Investments Survey Reveals Only Nine Percent of Women Think They Make Better Investors than Men, Despite Growing Evidence to the Contrary, Fidelity Investments – 2017
Women trade less often than men, with better results, Financial Time – 202
Women Investors Buck Stereotypes: A Powerful Yet Misunderstood Economic Force, Capital Group – 2017
Photo by Hannah Busing