Women and Investing in 2024: Where Women Win

Women have traditionally been less likely to invest than men, and, over time, this has serious financial repercussions. The median retirement account balance was $31,291 for women in 2021 compared to $45,106 for men, according to a study by Vanguard. That's a difference of 44%.

Image source: Getty Images.

The good news is that more women are saving for retirement and investing their money. Fidelity reports that more than two-thirds of women are saving for retirement, and 60% are investing in the stock market. Women are starting to invest at younger ages as well. What else is changing with women 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 female investors across a variety of areas, be sure to check out The Motley Fool's Women in Investing awards.)

Demographics

Demographics are statistical characteristics of a population. They can include almost any descriptive trait, but the usual data points include gender, age, race, ethnicity, income and more.

Key findings

As of 2023, around 60% of women invest in the stock market, and 68% save for retirement.
Investing is most popular with younger women since 71% of Generation Z women and 63% of millennials invest.
Women investors 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

Understanding women and investing

The percentage of women who invest in the stock market is around 60% as of 2023.

A study by Fidelity found that 60% of women invest in the stock market. A 2023 Gallup survey found that 62% of women own stock through either a brokerage or retirement account compared to 59% of men. Historically, only 40% of women have invested, according to the CFA Institute, so this latest data shows quite a bit of progress.

The retirement savings gap is also narrowing as 68% of women were saving for retirement in 2023 compared to 77% of men, according to Fidelity. In 2019, 66% of women were saving for retirement compared to 82% of men.

One of the most promising findings is that investing is particularly popular with younger women. Here's the percentage of women from each generation who invest:

Generation Z: 71%
Millennials: 63%
Generation X: 55%
Baby boomers: 57%

Another positive change is that women are getting started with investing earlier in life. 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 would 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.

Men vs. women investing: How do they differ?

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 investors 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 December 2012 to 2022 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 (2023).
ACCOUNT TYPE	RISK-ADJUSTED RETURN
Female-led joint account	1.01
Male-led joint account	0.96
Single female	0.95
Single male	0.83

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 be more conservative or moderate than men when they invest, while men are more likely than women to invest aggressively. The table below has data from Wells Fargo on the differences in how women and men invest.

Data source: Wells Fargo (2023).
Investing Approach	Women	Men
Conservative	9%	6%
Moderate	53%	39%
Aggressive	39%	55%

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. Robinhood found that, in December 2021, 41% of female investors said they have not and would not invest in crypto compared to 24% of male investors.

It's not just cryptocurrency either. Warwick Business School found in 2018 that female investors were less likely to indulge in "lottery style" investing, referring to investing in speculative stocks.

Women investors 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. Fidelity found that 51% of women wait out market volatility compared to 43% of men. Men are more likely to increase their investments (28% of men to 16% of women) and also to decrease their investments (9% of men to 6% of women). It's generally recommended to follow a consistent investing strategy because it's impossible to time the market.

CBOE Volatility Index (VIX)

The Chicago Board Options Exchange Volatility Index, or VIX, is an index that gauges the volatility investors expect in the stock market.

Vanguard found that women log on to their accounts half as often as men and trade 44% 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 about it. Here's what recent studies have found:

Only 19% of women are very confident in their ability to invest money compared to 38% of men, according to Robinhood.
Only one-third of women see themselves as investors, according to Fidelity.
43% of women feel prepared to face future market dips compared to 62% of men, according to Fidelity.

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.

Perhaps due in part to their lower level of confidence, women are more willing to seek out help with investing. In a 2021 study by Wells Fargo, half of the women surveyed reported working with a financial advisor compared with just under 37% of the men.

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 nearly 22% 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

The challenges facing female investors

Women who invest deal with several issues that men don't, and that impacts their ability to build wealth. Two of the most prominent are the gender pay gap and the limited number of women in the world of finance.

The gender pay gap limits how much women can invest

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 2022, the median male salary was $52,612, which was 25% higher than the median female salary of $39,688, 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 cite inequalities in how they're treated by financial advisors

While progress has been made on the gender investing gap, one area where there hasn't been much positive change is in women's investing experiences. Nearly half (44%) of women report that they face inequalities in investing, according to 2023 research by New York Life, and that number has increased since 2019.

Many women also mentioned difficulties when working with financial advisors. Among female investors:

48% said that financial advisors treat women differently.
48% said that women feel patronized by financial advisors.
40% said that financial advisors are less likely to listen to ideas from a woman.
40% said that financial advisors push women out of financial conversations.

All of those numbers have also gotten worse from when New York Life conducted market research in 2019.

Another reason women may perceive inequitable treatment from financial advisors is because finance is a male-dominated field. Only about one in seven investment professionals working on active U.S. equity funds from 2008 to 2021 were women, according to Vanguard. Among named portfolio managers, only about one in 10 were women.

Women are closing the gender investing gap

For decades, there has been a significant gender investing gap, but now there's evidence that it's closing.

More women are investing, they're generally more level-headed investors than men, and they're more likely to look for advice from financial advisors. Women are also 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.