There’s good news for the growing share of women pursuing investing: Despite their lack of confidence, women investors tend to outperform men.
Just over two-thirds of women now invest outside of retirement, up from 44% in 2018, according to Fidelity Investments’ 2021 Women and Investing Study, which polled 1,200 women. Broken down by generation, that share is even greater among Millennials, at 71%. Among Gen Xers, it’s 67%, and among Baby Boomers, it’s 62%.
Half of women have become more interested in investing during the pandemic, and 42% said they have more money to invest since the Covid-19 crisis began, per Fidelity (NYSE: FNF). Again, even more Millennial women said these things.
Stressed by the pandemic’s effect on jobs and the economy, women have said they’re ready to curb spending and save more. Many households bolstered their savings over the past year and a half, while others faced job losses or income uncertainty. Women came away from the experience motivated, upping their retirement contributions and putting money into the stock market.
“In crisis, women wake up. They learn that they have to take control of their own money and they shouldn’t be depending on anybody else,” Tahira Hira, emeritus professor of consumer economics and personal finance at Iowa State University, told The Washington Post.
When women get into investing, they generally do well: Fidelity data over the last decade reveals women outperform men by .4% on average. Women’s buy-and-hold approach to investing offers more long-term benefits than frequent trading, per CNBC.
Moreover, women are less likely than men to make panic sales with their investments during downturns, researchers recently discovered. Married men over age 45 who consider themselves experienced investors have the greatest tendency to “freak out.”
One in 5 women said they made first-time investments in new asset classes over the past 12 months, Fidelity found. Just over two-thirds are investing in individual stocks or bonds, 63% are putting their money into mutual funds or EFTs, half are using money market funds or CDs and about one-quarter are investing in ESG or sustainable investments.
Reflecting the current buzz over Bitcoin and other cryptocurrencies, 23% of women are putting money into crypto, and 22% said they want to learn more about digital currencies. More women, too, are turning to the Robinhood app to invest.
Despite this increase in investing activity among women, confidence and image issues persist. Just one-third of women see themselves as investors, and the same share feel confident in their ability to make investment decisions. Just 14% would say they know a lot about saving and investing.
Prompted by the pandemic’s upheaval, 25-year-old Juli Adhikari took a first step into investing in April 2020. She told The Washington Post investing was “a world I didn’t think I belonged in.”
Fidelity has found women are confident in their role as CFO of their household, but are less self-assured with regard to investing and long-term planning; they tend to defer to their partners or doubt their own abilities in these areas. Nearly 70% of women confidently manage their household budget, but just 19% select investments that align with their goals with the same aplomb.
Greater know-how could tackle the issue: Seven in 10 women said they’d need to know more about choosing individual stocks before investing. About two-thirds said they’d be more likely to invest if they had clear steps to do so.
More than 60% of women plan to increase their understanding of financial planning and investing over the next year, which might ease sleepless nights. Millennial women (77%) were more likely than Baby Boomer women (59%) to say finances have kept them up at night. The most common reasons they can’t sleep? Long-term finances, followed by managing debt and not earning enough money.
