Women and investing: what does the future hold?

Why should women invest? 

Investing is important. 

It can be one of the best ways to achieving your goals in life, such as accumulating enough wealth to be financially secure and planning a happy, comfortable retirement.  

Learn to be a wise, knowledgeable investor, and you can maintain your purchasing power and keep one step ahead of inflation. It’s never too early or too late to start.  

For a woman looking to invest, now is the time. Opportunities for investing are far greater, and the barriers of prejudice and social convention are far less prevalent.  

In 2020, in almost 60 percent of family households in the US, women were solely responsible for making investment decisions, according to investment management company State Street Global Advisors, and that proportion is likely to increase.  

More and more, there are opportunities to invest in women-owned businesses too. Payroll platform solution Gusto found that in 2021, 49 percent of new businesses in the US were women-owned, and female entrepreneurship is increasing fast.   

Are women better investors? 

Right now, women control more investable capital, shares of stock, and corporate board seats than ever before.  

So, could it be that women make better investors? Here are some strengths and traits that could help answer the question.  

Performance – in 2021, Fidelity analyzed more than 5 million customer accounts and found that women outperformed men by around 0.4 percent annually between 2011 and 2020. 

Purpose – women tend to invest with more purpose. They are likelier to rate a company’s social mission as highly important. 

Discipline – in 2021, Wells Fargo research revealed that women had a more disciplined approach to investing, which may help achieve better risk-adjusted returns.  

Judgment – the Wells Fargo study also concluded that women tended to take the right kind of risks. Although they were more risk-averse, they achieved similar returns to men. This links to a tendency among some men to trade in excess and be over-confident, which doesn’t lead to superior returns. 

How do you get started? 

A study by Fidelity in 2021 revealed that 65 percent of women would be more likely to invest or get more involved in investing if they had proper guidance and support.  

As with everything that involves your finances and potentially life-changing decision-making, it’s important to seek expert professional help before taking the plunge. You need to learn and get experience to find your feet.  

Financial advisors and planners can help bridge this gap. They are on hand to provide expert advice and guidance, helping you reach your financial goals. Think about it; if you have a health problem, you seek the advice of a medical professional; why should it be any different when it comes to your finances?  

But unfortunately, according to the 2023 Unbiased Financial Confidence Survey, over half of consumers felt too intimated to seek financial advice even if needed. While getting financial advice may seem daunting, it doesn’t have to be.   

In fact, hiring an expert advisor can help reduce the complexity and stress of managing your finances and finding the right investments. Having someone to turn to and ask questions or a simple “Is this right?” can be a great source of comfort and security, especially when embarking on a new investment adventure.  

Some tips for investing 

If you’re a total beginner, ask yourself some important questions before starting your investment journey.  

In particular, be honest with yourself about your capacity for risk-taking. If you feel risk-averse, you may be better off starting with fixed-income investments, such as bonds or money-market funds. If you’re not so sensitive to risk, or you’ve gained some experience, you can begin to dip your toe into higher-risk investing in the stock market. 

It’s hard to say what the absolute best investment for women might be, but one of the soundest investments anyone can make is in a low-cost S&P 500 index fund. These provide you with the benefits of diversification at almost no cost and allow you to benefit from the growth of the largest and most dynamic US companies. You could gain returns of around ten percent annually over the long term on an investment like this. 

However, before investing, it's vital to do your own research and weigh up all of your options before taking the plunge.  

The bottom line 

It’s only relatively recently that women have started to impact the world of investments. But the great news is they’re making up for lost time. 

Since 2018, women’s wealth globally has increased dramatically – by $4 trillion, according to wealth manager Coutts. However you look at it, the influence of women on the investment world is overwhelmingly positive, and there is huge potential for transformation and growth in the future. There has never been a better time to get involved.  

As we’ve mentioned, seeking expert help when considering investing is always a good idea – a professional financial advisor will help establish your best route forward. Find your perfect financial advisor here.