It is more important than ever that women play a proactive role when it comes to their finances. When asked if women feel that they know less than the average investor about investing and the financial markets, 55% of women agreed. Alongside this, women are more hesitant to invest than men, keeping 71% of their money in cash. The goal of this article is to highlight the importance of investing for women and provide confidence to help you take control of your finances.
When it comes to securing their financial future, women have some obstacles to overcome. There are a few unique reasons behind this. First, women have historically earned less than men. Although women are almost half the workforce and receive more college and graduate degrees than men, their take-home pay is still considerably less. In 2017, female full-time, year round workers made 80.5 cents for every dollar that their male counterparts earned, according to the Institute for Women’s Policy Research. On top of that, women also lose earnings by spending less time in the workforce raising children and caring for family members.
This is especially harmful because women are living longer than men. On average, men are living until the age of 76, while women are outlasting them, living to an average age of 82. That is 6 additional years of expenses that women need to save for. In addition, 56% of working women do not participate in their employer sponsored retirement plans. This savings pattern does not match the long-term need.
Taking all of this in consideration, although women on average are less confident than men when it comes to investing, they tend to be better investors. Analysis completed by Fidelity and SigFig shows that female investors on average outperform men by up to 0.6% in a years’ time. This may seem minor, but year over year can lead to a significant advantage. This can be attributed to a few different characteristics. One reason for better investment returns is that women tend to take on less risk than men by buying less stock. Women also change investments in their portfolios 45% less than men, they tend to be more “buy and hold” investors. Lastly, 64% of women agreed they are more likely to seek advice and work with a financial advisor, compared to 56% of men.
Because of all of this, it is increasingly important that women take an active role when it comes to their finances. In effort to overcome these obstacles, it’s important to ask questions, conduct research and work with a CERTIFIED FINANCIAL PLANNER™ in order to take control of your own financial future.