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Women and Investing: 30 Years of Research and Statistics Summarized

When it comes to investing, women and men differ. Here's what the research says.

By Lyle Daly – Updated Mar 1, 2023 at 10:53AM

Women have traditionally been less likely to invest than men, and, over time, this has serious repercussions. Women's retirement income is about 83% of men's, and women are 80% more likely than men to become impoverished after age 65, according to the National Institute on Retirement Security.

banking bank ATM money
Image source: Getty Images.

The good news is that more and more women are investing their money. Fidelity reports that about two-thirds of women now invest outside of their retirement plans, and women are starting to invest at younger ages as well.

What else is changing with female investors? How do their portfolios perform? Read on for the most recent data on women and investing.

(And if you're interested in seeing some of the most impressive women investors across a variety of areas, be sure to check out The Motley Fool's Women in Investing awards.)

Key findings

  • 67% of women invest outside of retirement plans as of 2021, up from 44% in 2018.
  • Women are opening brokerage and retirement accounts at younger ages. Women from 18 to 35 first opened a brokerage account at age 21 on average, compared to age 30 on average for women who are 36 and older.
  • Women get better investing returns than men, with studies finding differences of 0.4% to nearly 1%.
  • Women aren't as confident as men in their investing abilities and demonstrate lower levels of investing knowledge.
  • Women's investment account balances lag behind men's by up to 44% due to the gender pay gap.

A growing number of women are investing

The percentage of women who invest outside of retirement grew from 44% in 2018 to 67% in 2021, according to Fidelity. Historically, only 40% of women have invested, according to the CFA Institute, so this latest data shows quite a bit of progress.

The CFA Institute has also predicted that, by 2025, there won't be a meaningful gender gap in stock market participation in the United States.

One of the most promising findings is that investing is particularly popular with younger women. Fidelity found that 71% of millennial women were investing outside of retirement, compared to 67% of Gen Xers and 62% of baby boomers.

Women are also getting started with investing much sooner. In 2022, Fidelity found that women in the 18-to-35 age group first opened a brokerage account at age 21 on average and a retirement account at 20. Women 36 and older first opened a brokerage account at age 30 on average and a retirement account at 27.

Those extra years of investing make a massive difference. Because of compound interest, investors earn larger returns the longer they invest.

To demonstrate this, let's compare two hypothetical investors. Investor A starts at age 25 and invests $100 per month. Investor B starts at age 35 and invests $200 per month. Both investors earn 8% per year on their portfolios. Here's how much they'd have at age 65:

Data source: author's calculations.
Investor Total Contributed Ending Balance
Investor A $48,000 $335,737
Investor B $72,000 $293,630

Even though Investor B is putting in twice as much money per month and ends up contributing $24,000 more in total, it's not enough to catch up. That's why starting early is the best decision any investor can make.

How do men and women differ when investing?

Surveys and data from brokers have revealed several key differences in the investing behaviors and performance of men and women. Here's what makes female investors unique:

Women outperform men in investment returns

Multiple studies have found that women outperform men when investing. The only question is by how much.

Women outperformed men by 0.4% in a 2021 analysis of 5 million Fidelity customers over a 10-year period. A University of California, Berkeley study conducted in the 1990s found an even larger performance difference of nearly 1%.

A Wells Fargo study covering January 2016 to December 2020 provides more evidence that women do better than men at investing. It reported that women achieved higher returns while taking on less risk than men.

The chart below provides the risk-adjusted returns for single men, single women, joint accounts led by men, and joint accounts led by women. Higher numbers indicate greater returns.

Data source: Wells Fargo (2022).
Account type Risk-Adjusted Return
Female-led joint account 1.29
Male-led joint account 1.22
Single female 1.37
Single male 1.15

Women are more conservative investors

Why have studies consistently found that women get greater returns on their investment portfolios than men? Although there's no single explanation, there are a few notable behaviors that could give female investors an edge. It starts with a more conservative approach.

Women tend to take on less risk than men. Wells Fargo found that women took approximately 82% of the risk that men took when investing.

There's also some evidence that women are less likely to hop on investing trends. Meghan Railey, co-founder and CEO of Optas Capital, has written that, "While we have found that male clients tend to eagerly invest in the latest asset class everyone is talking about, like cryptocurrency, female clients do not generally jump on the shiny bandwagon."

That's supported by data on the levels of interest male and female investors have shown in cryptocurrency. Gallup found that, in June 2021, 11% of male investors owned Bitcoin (CRYPTO:BTC) compared to just 3% of female investors.

Women are less impulsive

The most effective investing strategy (and our Foolish investing philosophy) is buying and holding quality stocks for the long haul. Women generally do a better job of that and of avoiding impulsive decisions. Studies have found a few clear examples of this in action.

Women are more likely to remain calm during market volatility. Nationwide found that only 8% of women liquidated their retirement accounts in this situation, compared to 15% of men. A turbulent market is typically the worst time to sell because stock prices drop, and you could end up losing money. You're better off holding through down markets so that your portfolio can rebound.

Also, women are less active investors than men. Vanguard found that women log on to their accounts half as often as men and trade 40% less frequently. A University of California, Berkeley study showed similar findings, reporting that women traded 45% less frequently than men. While men's trading activity reduced their yearly returns by 2.65% per year, women's reduced theirs by 1.72%.

Women aren't as confident in their investing abilities

Even though women do better than men at investing, they're less confident. Fidelity found that only one-third of women see themselves as investors, and the majority don't feel confident making investment decisions.

Data from FINRA drives home this point. It found that a much larger percentage of men are confident in their investing abilities compared to women.

Data source: FINRA (2020).
Gender Assess Themselves as Having a High Level of Investing Knowledge Feel Comfortable Making Investment Decisions
Men 71% 49%
Women 54% 34%

Women score lower than men for investing knowledge

There's a knowledge gap between male and female investors, which could explain why women aren't as confident about investing. It also supports the idea that you don't necessarily need to be the most knowledgeable investor to be a successful investor.

In a 2021 study, FINRA gave men and women a 10-item investor knowledge quiz. Participants who answered five or more questions correctly were considered to have high investing knowledge. Participants who answered fewer than five questions correctly were considered to have low investing knowledge. Here's how the results varied by gender:

Data source: FINRA (2021).
Gender High Investing Knowledge Low Investing Knowledge
Men 57% 43%
Women 36% 64%

Women have less in their investment accounts than men

Unfortunately, women build significantly less wealth than men on average. An analysis by Vanguard of its retail accounts found that the median balance for women was $38,000, compared to $49,000 for men, meaning women had 29% less on average. That was despite men and women having the same average length of account ownership (13 years).

The difference is even greater with Vanguard defined contribution plans, where the average and median balances for men are 44% higher. Even though men and women have similar participation rates in these plans, men accumulate much more.

Data source: Vanguard (2022).
Gender Median balance of defined contribution plans Average balance of defined contribution plans
Men $45,106 $170,942
Women $31,291 $118,849

The gender pay gap is still an issue

There's a notable difference in investment account balances between men and women, and that's not the only area where men are able to put away more. Men also save more money on average. In 2022, men saved more than twice as much as women: $7,007 to $3,146, according to New York Life.

The primary cause is the gender pay gap. While this subject has received considerable attention in recent years, it's still a serious issue, and progress has been slow.

In 2021, the median male salary was $50,391, which was 27% higher than the median female salary of $36,726, according to average U.S. income statistics collected from the U.S. Census Bureau. With such a large gender pay gap, it's no surprise that women accumulate far less wealth than men.

Women are closing the gender investing gap

For decades, there has been a significant gender investing gap. Men have traditionally been far more likely to invest than women, in large part because finance is a male-dominated field. Only 14.5% of stock brokers are women, according to Zippia. In addition, Morningstar reports that just 11% of fund managers are women.

On the bright side, this investing gap is closing. More women are investing, and women are starting to invest at younger ages.

There's still plenty of work to be done. The gender pay gap limits how much women can save and invest compared to men. Women also lag behind men in investing knowledge, even though they do better from a performance standpoint. But overall, there's plenty of positive data on women and investing. If the current trends continue, women could make the gender investing gap a thing of the past.

Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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