Let’s Start To Close the Gender Investing Gap

Marshall Rathmell |
Categories
Author - Madi Krummen

You’ve heard of the gender pay gap, but have you heard of the gender investing gap? According to Fidelity’s 2021 Women and Investing Study, only 33% of women see themselves as investors, and only 42% feel confident to save for milestones such as retirement (The Motley Fool). With the stock market being something that is accessible to everyone regardless of age, gender, etc., this is a shockingly low number. There is no concrete answer as to why this is but there are many reasons why this gap needs to close.

One reason for this is women tend to live longer than men, therefore they will need their money to last longer. Most financial planning software indicates a 30% life expectancy of 94 for women. If you plan to retire at age 65, that is 29 years of retirement. The best way to be able to save enough money for 29 years of retirement living expenses is to invest in the stock market.

One reason that could explain why so few women have their money invested is because women are more risk adverse than men. They feel better having their money sit in savings accounts instead of investment accounts. The downside to this is their money does not have the opportunity to grow and they are missing out on compound interest. Because of the risk aversion that women have, if they are invested, they tend to invest in bonds instead of equities which means that their money will not withstand the pace of inflation. 

Unfortunately, the gender pay gap probably won’t go away any time soon but neither will the stock market. Also, women have an equal opportunity to invest in the stock market compared to men. While an individual’s ability to invest is dependent upon their income level, investing in the stock market can help women in ways that closing the pay gap cannot.

If you aren’t comfortable investing yourself in the market find a financial planner you trust (like BCR) to identify your goals, what you need your investments to provide, and how you can reduce unnecessary risk to achieve what is important to you.