International Women’s Day
Women and Investing
This year’s International Women’s Day is on March 8th. To celebrate, we wanted to write about women’s roles and views about investing.
At first glance, it may be a little disheartening to see low investing participation numbers, but the future is bright as more and more younger women are learning about and actively participating in investing. As the proud father of two girls, I do everything I can to help educate my daughters about personal finance and investing. You can see some of the ways I have taught them about financial management here.
Just last night, I was talking to both girls about how much they need to save when they start earning money. I also reminded them that they should not spend money in order to fit in or impress others. Additionally, my youngest daughter Sage recently won an essay writing competition. While I am proud of her for winning a tough competition, I am prouder that she is not spending a dime of her prize money. Instead, she will be depositing her first-ever check all to her savings account.
The Historical Problem: Women Lack Investing Confidence
In a 2022 report by Bank of America, the authors found that:
“Women are confident managing everyday financial tasks such as paying bills (92%) and managing a budget (87%), yet only half are confident managing investments (53%) and creating a diversified portfolio (44%).”
Also in 2022, a study by the TIAA Institute-GFLEC Personal Finance Index showed that women tend to have lower financial literacy than men. Frankly, this surprised me because I haven’t noticed that to be true, but I wanted to share the statistics since my experience may only be with clients in higher socio-economic groups. In defense of women, men didn’t score all that well either.
It’s Getting Much Better
There are reasons for optimism as younger women break stereotypes and become financially educated. Both of those factors lead to increased confidence.
In 2020, the Boston Consulting Group (BCG) found that younger women are more likely than older women to take the lead in financial decisions.
The Growing Number of Women Investors
Fidelity revealed that the company added 48% more new women customers in 2023 compared to 2019.
They also said that younger women are leading the way. Fidelity added 99% more Gen Z women customers and 48% more new Millennial women in the same timeframe.
When Women Invest
Bankrate compiled statistics about how women investors fare compared to investors who are men:
- Outperformance. A 2021 analysis by Fidelity of over 5 million customer accounts showed that women outperform men by an average of 40 basis points annually, or 0.4 percent, from 2011-2020.
- Overconfidence leads some men to trade in excess, while women hold back. A study by University of California-Berkeley found that men traded 45 percent more than women did. The study states that in areas such as finance, men are more overconfident than women.
- Women invest with purpose. A 2019 Money Crashers survey found that almost half (49 percent) of women rated a company’s social mission as extremely or very important to them, compared to just 29 percent of men.
- Women showed more discipline. In a 2021 investor survey, Wells Fargo found that women tended to have a more disciplined approach to investing that may have helped them achieve better risk-adjusted returns.
- Women took the right kind of risks. Wells Fargo’s study also stated that women are more risk-averse than men, but that it did not translate to lower returns. Their study actually found women achieved similar returns to men while taking significantly less investment risks.
Financial Knowledge Equals Financial Confidence
Regardless of your gender, gaining financial and investing knowledge can only help. One way to educate yourself is to go through free online courses and information. Many have bite-sized modules that can be reviewed at a person’s own pace.
Here are just a few websites that offer free financial and investing courses:
Khan Academy:
Financial Literacy (broader and more general than their personal finance courses)
Savvy Ladies
Clever Girl Finance
Free Personal Finance Courses & Resources
We Can All Help
Hopefully, the information in this International Women’s Day blog post has been helpful, and perhaps at some point spurs you into action. Regardless of your investing confidence, we can all continue to break stereotypes and encourage young women and girls to learn about investing.
At WealthArch, we believe that clients with higher investing knowledge become great partners in our collective investing journeys. That’s why we spend a lot of time sending frequent updates and quarterly earnings reports about every stock we hold in our portfolios.
If we can help you in your investing journey, please contact us and let us know!
(For more information about International Women’s Day, please visit the International Women’s Day website.)
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Earl Yaokasin, CFA, is an investment manager who runs WealthArch Investment Services in Pasadena, CA. He is a fiduciary with over twenty years of experience, and whose entire personal portfolio is managed by the firm in the same investments as the company’s clients. His firm focuses on value investing, similar to Warren Buffet’s successful approach, and disciplined strategies designed to create growth with downside protection, enabling clients to move steadily towards their life goals and aspirations with confidence.