Why Do Women Tend to Outperform Men When it Comes to Investing?

Women’s roles in household decisions have changed dramatically over the past century and continue to evolve today. When it comes to personal money management, women traditionally have spent money day to day on household items like groceries and essentials. However, wealth management decisions were traditionally in the hands of their male counterparts. In two-thirds of affluent households in the United States, men are the key financial decision makers.¹

Women are confident in most financial matters, but when it comes to investing, they tend to be less confident than men. A study by Merrill reported just 52 percent of women say they are confident about investing, compared to 68 percent of men.² The study also notes that failing to invest is the top financial regret among women.

Vanguard’s 2022 How America Saves report found that women are more likely to join their employer’s 401(k) plan.³ Additionally, men take more risks when it comes to investing, and move in and out of investment positions at a 50% higher rate than women. Female investors are outperforming males by a margin of 0.5% to 1%. The key factor is overtrading. Men are doing it, women aren’t. There is an inversely proportional relationship between the amount of trading you do and your overall portfolio performance.

Change is on the horizon. “By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess—a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States,” according to McKinsey & Company, a global management consulting firm.⁴

What does this mean for you, and how can you take advantage?

• Educate yourself and face your fears. Investing can seem complex and there are definitely fears about making mistakes. Whether you research, take a class, or seek out professional help, knowing the basics of investing and creating a financial plan will help get you started.
• Start small and earn big. Take the time to figure out your goals, and then create an investment strategy to help you reach those goals.
• Utilize all the tools available. Capitalize on workplace benefits such as 401(k)s and health savings accounts. If you are closer to retirement, make sure you are maximizing catch-up contributions and evaluating social security strategies that may include divorced and/or widower benefits.
• Don’t wait. Time is your greatest advantage when it comes to building maximum wealth.

At Brogan Financial, we are your partner in getting you to and through retirement. Our advisors are educators that work with you to develop a plan to reach your long-term wealth and retirement goals. Schedule a complimentary review today.

Check out our Retirement Planning Guide for Women here!