Men vs. Women Investors: Survey Finds Women Have More Money in Their Portfolios
Written by
Gabrielle Olya
Edited by
Chris Cluff
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A recent GOBankingRates survey found that women were less likely to have low balances in their stock portfolios — 37% of women investors have less than $15,000 in their portfolios versus 45% of men. In addition, women investors are more likely to have high balances in their stock portfolios — 35% have over $35,000 versus 30% of men.
In this “Financially Savvy Female” column, we’re chatting with Kelly Gallimore, wealth manager at Merit Financial Advisors, about the possible reasons behind women investors’ higher balances, plus, tips for women who are looking to grow their own stock portfolios.
See other tips for women who want to invest.
We were pleasantly surprised to see that women have high balances in their investment portfolios. What are some possible reasons that women investors are more likely than men to have over $35,000?
I believe the overriding reason is financial security. Beyond that, women are becoming more involved in the finances of their households. According to a 2020 McKinsey & Company study, there was a 30% increase in married women who made financial household decisions over the last five-year period. As wealth continues to transfer to female investors — $30 trillion by 2030 — they have educated themselves in this arena and are intentionally passing the knowledge to the next generation.
In addition, the number of female wealth managers is increasing, and they are attracting women who might not otherwise seek out a professional advisor.
Women were also less likely to have under $15,000. What are some possible reasons behind this?
Again, financial security is the primary driver, and, based on my experience as an advisor, women generally tend to be more concerned about this than men. There are exceptions, of course, but when entering a financial planning engagement, women want to know the answer to the question, “Will I be OK?” This is especially true for those navigating a significant transition such as widowhood or divorce.
Additionally, professional limitations remain a factor. Although the wage gap is shrinking, women still earn 15.5% less than men. Women are also more likely to leave their jobs due to family responsibilities. Other variables may enter the equation, such as a longer life expectancy or even childhood experiences. For example, a woman who grew up in an insecure financial environment may be more motivated to save for the future.
Thanks!
What tips do you have for women investors looking to grow their stock portfolios?
First, understand your natural behaviors and biases related to investing. I use a tool called DNA Discovery to help clients gain insight into their innate approach to financial matters, biases and risk tolerance. Knowing how you naturally approach financial decisions — aside from learned behavior — is invaluable for discerning what you have done correctly and for overcoming blind spots.
Consider potential investments in view of your overall financial situation. There are other components to financial planning aside from investments. For instance, you may receive a bonus or inheritance and immediately want to invest in the market. However, if cash flow is tight, there is consumer debt or a need to build up emergency funds, these should be tackled first. It is also important to invest in risk management, such as disability and liability insurance, as well as estate planning, no matter how small you may feel your estate will be.
Evaluate the objective for the investment, whether long term, such as retirement, or shorter term, such as education savings. A long-term (10-plus years) investment can usually handle the volatility of a more aggressive allocation, as there is time to ride out the highs and lows. However, if you expect to need funds sooner, the allocation should be gradually more conservative based on the expected timeframe.
Remember that markets can be volatile and resist the urge to liquidate at an inopportune time. Even for long-term investments, volatility can be unnerving — and it is often tempting to cash in prematurely. In doing so, you lock in the losses and do not give yourself the opportunity to capture future gains. Returning to the market when things improve is costly because you have sold at a lower price than you repurchase for later.
Be aware of hidden costs, such as trading fees, that can drain your account. Depending on your account balance, the type of assets you hold and the frequency of trading, fees can vary from $0 to $25 or more per trade. Mutual funds also charge an expense ratio. You are not billed for it, but it lowers your investment returns.
Take advantage of what your employer offers before looking elsewhere. Contribute as much as you can to an employer-sponsored retirement plan. If you add pre-tax dollars, these contributions lower your tax liability. At a minimum, contribute up to the amount that your employer will match to receive additional funds into your retirement fund. Although not directly related to investments, be sure to explore all benefits available to you — health, disability and life insurance; employee assistance programs; flexible savings accounts; etc. There may be something you have not taken advantage of that will free up more money for you to build your investment portfolio.
If you are not comfortable researching options on your own, consider working with an advisor. This can greatly increase your confidence — and even your returns by as much as 1.5% to 4%. Two important questions to ask a prospective advisor are: “How do you get paid?” Fee-based means that the advisor does not earn commissions but is paid based on the amount of assets under management. This ensures less unnecessary trading in the account that can drive up your costs. This prompts the second question: “Are you a fiduciary?” An advisor who puts herself out there as a fiduciary is held to a higher standard of always working in your best interests.
Survey methodology: GOBankingRates surveyed 1,021 Americans ages 18 and older from across the country between Oct. 12 and Oct. 16, 2023, asking 23 different questions: (1) How much did you spend on your pet in the last year?; (2) How much have you spent/are you planning to spend on Halloween this year?; (3) How much money do you spend on kid-related activities in a year?; (4) How much do you spend on average on your monthly utility bills (electric, heat/gas, water)?; (5) What spending/saving habits have you had to change in the past year due to inflation/rising prices? (Select all that apply.); (6) What was the biggest unexpected expense you had this year?; (7) How much do you currently spend on monthly car payments?; (8) Do you live in a single-income or dual-income household?; (9) In the past year, did you have to take on a side gig because of rising prices/inflation?; (10) How much do you bring home from your side job(s) each month?; (11) How much have your overall expenses gone up in the past year?; (12) What is your top financial priority to end 2023?; (13) What is the top way you’ve earned your money/gained wealth?; (14) Have you started financially preparing for 2024?; (15) How much have you spent on home upgrades in 2023?; (16) How will the resumption of student loan repayments affect your budget?; (17) How much do you currently owe in student loans?; (18) How much do you spend on yourself (not including housing, food, etc.) out of each paycheck?; (19) How much do you spend on online purchases per month?; (20) Where do you shop for groceries most often?; (21) Do you shop around for groceries to get better deals?; (22) What are you currently invested in? (Select all that apply.); and (23) What is the current value of your stock investments? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
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