Women tend to live longer than men, meaning that savings and investments play an even more important role in our future. Despite this, a new NerdWallet survey found that only 48% of women invest in the stock market as opposed to 66% of men. Why is this the case?
Keep reading to learn about why women invest less than men and the barriers women face when trying to enter the market.
Why Aren’t Women Investing?
Fewer women than men have learned how to choose investments. Many investors are self-taught or have learned about investing from a teacher, financial advisor, or friend. There are several reasons that might explain why women are less likely to be well-versed in choosing investments, including:
- Not as many women attend school for a business degree. The ratio of women in business schools was 39% in 2019. This means that women are less likely to learn about investing from a teacher or professor.
- Women are less likely to talk about money and investing with their friends than men are. This makes it less likely for women to learn about choosing investments from friends and same-sex peers.
- The same NerdWallet survey mentioned above shows that only 22% of women stated that they feel confident about investing, as opposed to 41% of men. This lower level of confidence and a higher level of uncertainty surrounding investing may prevent women from pursuing knowledge about investing or participating in self-teaching.
- Women are less likely to begin investing until they have a good understanding of the subject, which means they invest less. Conversely, men are more likely to be overconfident and make investments without an in-depth understanding of all necessary information.
- Men have a higher propensity for risk-taking behavior, whereas women are generally more risk-averse. This can affect both the likelihood of women making investments as well as the assets that they invest in (real estate over stocks).
Overcoming Barriers
Despite the gender ratio of investors, women have several advantages in the market. Women tend to make higher returns than men, they tend to seek out help from professionals and financial advisors sooner, and they make more calculated investment decisions.
To change the ratios and ensure that women become a larger presence in this space, start talking to your daughters, mothers, sisters, and friends about the importance of investing.
The barriers that prevent women from entering the market can be overcome by prioritizing education surrounding investments. There’s no better time to start than now. Do some research, talk to an advisor, and watch your money grow.