Women View Investing as ‘Too Risky’ — It’s Holding Them Back From Building Wealth
Written by
Gabrielle Olya
Edited by
Amber Barkley
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
A recent GOBankingRates survey asked men and women to describe their feelings about investing, and while 39% of women said it’s a great way to build wealth, 28% said “It’s way too risky.” Meanwhile, only 18% of men view investing as “too risky.”
In this “Financially Savvy Female” column, we’re chatting with Megan Slatter, wealth advisor at Crewe Advisors, about why women are more likely than men to view investing as risky, why women should be investing and how they can do so while mitigating risks.
Why might women be more likely to view investing as ‘too risky’ compared to men?
I think it ties back to social norms and cultural expectations. Historically, we’ve really encouraged women to be more risk-averse. There’s an emphasis on security, especially financial security, and that conditioning starts at a really young age. We condition our girls to be more cautious across life in general when it comes to decision-making. We’re conditioned to not show any progress at all unless we’re successful.
[We need to] shift that narrative to “be brave” and “progress is where the focus should be — not perfection.” A big part of why investing in particular is something that is viewed as much too risky for women compared to men is the continued socialization. [We need to have] conversations and help them to be comfortable with the process — doing something consistently is more impactful than trying to hit a home run.
Why should women be investing?
Women have statistically been found to be better investors than men. There’s a lot of overwhelming evidence that really suggests that over the long term, women are better than men when it comes to investing. We have a long-term perspective, and we don’t get blinded by making frequent trades that are maybe not in line with what our goals are for the money. We’re more cautious and deliberate with some of those investment decisions.
We’re much more disciplined emotionally — we don’t sell because everything’s going down right now. We’ll maintain, because we recognize that that’s the long-term goal. And same with market booms — we won’t just jump in [because someone said], “Oh, you’ve got to get on this.” Women don’t get sucked into that as much.
When we don’t take advantage of these opportunities, we miss out on compounding, and that is the most powerful tool out there. Continuing to compound growth over a longer period of time is so much more powerful than trying to hit one home run with one investment.
There’s a lot of information out there about the gender pay gap, but [we don’t talk enough about] the gender wealth gap. We have a significantly smaller net worth than men. In addition, [there’s] the pink tax — just being a woman costs a lot more. So we’re really fighting from behind, trying to catch up, and so getting investing, getting your money working for you early is really, really important.
Thanks!
How can women mitigate risks when it comes to investing?
Start small. Small, consistent steps are much more meaningful in the long run than diving all in and investing in a more aggressive strategy. Make a contribution to a retirement account and do that every two weeks, whether it’s $50 or $100. And then [practice] dollar-cost averaging into the marketplace.
Identify what the goal is for each particular investment account. Maybe we have different goals for different investment accounts. Understand what those are beforehand and then be consistent with the contributions. Over time, you start to become more comfortable.
Survey methodology: GOBankingRates surveyed 1,008 Americans ages 18 and older from across the country between March 26 and April 1, 2024, asking 20 different questions: (1) Has a lack of financial literacy caused you to struggle with your money?; (2) Which current money hot topic is most confusing to you?; (3) Which money expert do you trust most for teaching you the basics of money?; (4) Since the pandemic started in 2020, do you think you have become smarter about your money?; (5) What poor money habits did you learn during your childhood? (Select all that apply); (6) What poor money habits did you develop in your early adult years? (Select all that apply); (7) What poor money habits have had an impact on your marriage/partnership? (Select all that apply); (8) What poor money habits do you worry about passing on to your kids? (Select all that apply); (9) What aspect of buying a car do you find most challenging/confusing?; (10) What aspect of buying a house do you find most challenging/confusing?; (11) What aspect of paying off debt do you find most challenging/confusing?; (12) What concerns you most about planning for retirement?; (13) What best describes your feelings about investing?; (14) How much have you saved in the last year?; (15) How much debt have you acquired in the last year, not including mortgage debt?; (16) Do you currently bring in enough money to cover your bills?; (17) How much do you think about your financial status?; (18) What best describes your feelings about managing your money?; (19) What is your monthly car payment?; and (20) How much income do you think is needed for a middle-class family to live comfortably? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
More From GOBankingRates
