So, I’m a dude, and I do sometimes kinda feel like investing can be a bit of a boys’ club. In groups I go to, or people I talk to it seems there can be more dudes than dudettes! I do understand we are striving for progress towards gender equality, there can still be a huge imbalance when it comes to who’s building their wealth in the stock market. But I’ve recently learned that when women do invest, they often do better than men!
Here are some shocking statistics that show the gender investment gap:
In a recent survey of 16-to-25-year-olds it was found that young men are twice as likely as young women to have investment accounts. Just wow!
When coming into any extra money, men were also twice as likely to choose investing over other types of spending.
This difference between men and women is huge! It really is about women missing out on building wealth. And ya know what? Women make better investors when they do choose to invest and build wealth!
Now, I didn’t really start investing until my 30s, and would totally get the hesitation. Trying to understand investing or having money discussions felt intimidating, exclusive for those “rich people”, and often a bit boring because I didn’t know what i didn’t know! But I’ve since learned that investing isn’t about becoming some crazy wizard of Wall Street. Investing is really about securing your future, one little decision at a time.
Now, let’s talk about why more women aren’t investing. Here are a few reasons I’ve found:
Confidence gap: Like many people, women feel they don’t know enough to start investing. This means they typically stick with what feels safe. Usually things like savings accounts.
Risk perception: Studies have shown that women tend to be a bit more risk-aware (not risk-averse!) than men. Think of this as women are more cautious about financial and money decisions.
Limited exposure: As Carrie Schwab-Pomerantz, a leading advocate for financial literacy, points out, “In order to close this economic gender gap and get women to stop keeping so much money in cash, we don’t just need education. We need to give them exposure to investing.”
I remember when I first started investing — taking the first step to contribute to a target date fund. That small action helped me overcome my hesitation and continue to learn more. At least I started!
The Female Advantage: Why Women Make Better Investors
Here’s where things get awesome. Despite being underrepresented in investing, women often outperform men when they do invest. This isn’t just a story—research backs it up. Not only investing, but business in general. Did you know that women lead organizations are 18 to 69 percent more profitable than other businesses in their respected industries!
Women typically:
Take their time: Women tend to research thoroughly before investing, rather than making impulsive decisions.
Trade less often: Less trading means fewer fees and less chance of making emotional mistakes during market ups and downs.
Focus on the long term: Women generally focus on long-term goals rather than short-term gains, which aligns perfectly with successful investing strategies.
Imagine two young adults, a man and a woman. Both started investing around the same time, his portfolio may be more of wild ride while hers may stay pretty steady. Now, five years later, guess whose portfolio had performed better? Sometimes, doing less really is more.
Starting Young: The Power of Early Investment Education
The earlier we can introduce girls to investing concepts, the better. Research shows that financial habits form much earlier then we think, and early exposure to investing can help close the gender gap before it gets even wider when they approach in adulthood.
Introducing our daughters, nieces, and other young women in our lives to investing doesn’t need to include crazy fancy financial speak that can be confusing and lead to them to tuning out. It starts with those simple conversations about how companies work, what stocks represent, what index funds are, and how investing helps money grow over time.
I wish I had spent more time with my daughter in having these types of discussions earlier. Helping her purchase shares of her favorite toy companies when she was, like, 10 years old for example. Imagine the difference it may have made to receive dividend notifications and annual reports as a kid, making the concept of ownership feel real from a young age.
Practical Steps to Narrow the Gender Investment Gap
1. Start the conversation early
Just like we talk about education or career choices, let’s talk about money and investing with the girls in our lives. Let’s make these discussions a normal part of our conversations.
Here are some ideas to get us started:
1. Hands-on experience: We could give stocks as gifts for birthdays or special occasions. Learning by doing is the best way to get started. Companies like Disney, Apple, or other brands that kids love make investing more relatable and exciting.
2. Lead by example: If you are a woman who invests, share your experiences with younger generations. If you’re new to investing yourself, consider learning together. Maybe you could start an investment club with your daughters and others? This could become a monthly ritual to research companies and funds and maybe even make small investments together.
3. Focus on financial literacy resources for girls: Continue to look for books, games, podcasts, Youtubers, experts on social media that you trust, and programs specifically designed to teach girls about investing and money. Resources that feature female investors can help girls see themselves in those roles.
4. Emphasize the connection between values and investing: Show how investing can align with personal values through options like socially responsible investing. This approach can really resonate with women and girls who want their money to make a positive impact.
Breaking the Money Taboo
One of the biggest obstacles to women’s financial empowerment is simply the taboo around discussing money. We just need to break the silence and normalize conversations about investing and money. This will give the next generation more permission to be curious and confident about building wealth.
I remember sitting with my daughter as we looked at her first investment statement. “This means you own a tiny piece of these companies” I explained. Her eyes widened. “So when they make money, I make money too?” That moment of understanding was priceless. She also wants to now get into more values based investing.
The Ripple Effect of Financial Empowerment
Financial empowerment can have a ripple effect on women and girls. When women and girls are financially empowered, they often will achieve more in life. They can build wealth, take care of their families, and pursue their dreams.
Let’s do this! Let’s normalize conversations about money and investing. Together, we can empower women and girls to achieve their financial goals.
When we invest in girls’ financial education and confidence, it has a positive impact on everyone. Women who feel more comfortable investing are more likely to achieve financial independence, handle financial challenges better, support causes they care about financially, and pass on financial knowledge to others.
Remember, education alone isn’t enough though. Girls need exposure and practice. By giving girls hands-on experience with investing, we’re not just helping them build wealth; we’re also empowering them to take control of their finances.
Investing in Her Future
The gender investment gap is a real thing and won’t be closed overnight. Every conversation, every share of stock, and every investment lesson brings women closer to financial equality. Whether you’re a parent, aunt, teacher, or mentor, you have the power to influence how the girls in your life think about money and investing.
We know these lessons benefit boys too. All children can learn about financial literacy. However, by making an effort to include girls in those money and investment conversations, we all can help correct a historical imbalance that has left many women financially behind.
So, let’s take the first step. Talk about it. Open that custodial account. The dividends of these small actions will grow over time, just like a well-chosen investment. The greatest return on investment might just be raising a generation of financially confident women who know their worth—in every sense of the word. \m/ \m/
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