What women get right about investing

Shelly Gigante

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on May 3, 2021

Women may be less likely to invest than men, but, when they do put money in the stock market, it seems they are better positioned for success.

A growing body of research suggests that women who invest, either through brokerage accounts or their workplace retirement plans, earn higher portfolio returns than their male peers. Why? Surveys reveal that women are more likely to:

  • Buy and hold.
  • Maintain balanced portfolios.
  • Remain calm during market swings.
  • Save more of their income.

A recent survey by Fidelity Investments, for example, found that female investors outperform male investors by an average of 40 basis points, or 0.4 percent — a seemingly negligible difference but one that packs a punch over time.1

Using current workplace savings rates and a hypothetical salary of $50,000, the survey found that women who start investing at age 22 would have $276,000 (or 15.4 percent) more socked away by age 67 than their male counterpart. That calculation uses the study findings that women typically save 9 percent of their salary annually and achieve a 6.4 percent annual rate of return, while men save 8.6 percent of their salaries each year and achieve a 6 percent annual rate of return.

Another study by Warwick Business School, sponsored by Barclays, found female investors outperformed males by a wider margin —1.2 percent.2 And the University of California, Berkeley famously found almost two decades ago that female investors tend to outperform their male peers by just under a percentage point per year.3

Despite their portfolio-friendly practices, however, women are still much less likely than men to put their money to work in the market.

A 2018 State of the American Family Study (SOAF) by MassMutual found 41 percent of women invest, versus 55 percent of men.

And that divide appears to be more pronounced among millennials. According to Wealthsimple, just 26 percent of women between the ages of 22 and 38 invest outside of their workplace retirement accounts, compared with 43 percent of millennial men.4

To secure their financial future, more women need to educate themselves about the risks and potential rewards of investing, said Cindy Hounsell, president of the Women’s Institute for a Secure Retirement, (WISER).

“Women tend to live longer than men so they need more money for retirement, but they still earn less money in the workplace so there’s that gap,” she said in an interview. “Women are also more likely to end up single as they age, either through divorce or by being widowed, so they often don’t have extra help from a spouse in old age. They need to operate as if they’re going to have to [secure their financial future] on their own. Women have to learn how to save and invest effectively.” 

That begins with exploring some of the strategies that are helping their peers get ahead.

The buy-and-hold mentality

For example, women are more likely to buy and hold stocks for the long haul because they focus on future goals, like retirement or college savings for their kids, rather than market performance today, according to the Fidelity study.

They are also more likely to avoid costly knee-jerk reactions to market turbulence, opting instead to stay the course when the going gets rough.

Alicia Munnell, director of the Center for Retirement Research at Boston College, said in an interview that women’s ability to make an investment plan and stick with it works to their advantage.

Men, by contrast, are more likely to engage in active trading because they are focused on immediate returns. The higher transaction fees they incur help reduce any gains they eke out.

At the same time, men may be more likely to try to “time the market” by attempting to buy low and sell high, which is a higher risk investment strategy that can easily backfire.

The Fidelity study found that men were 35 percent more likely to make trades than women. Tellingly, the men who do consider themselves to be active investors made an average of 55 percent more trades in 2016 than their female counterparts.

Maintain balanced portfolios

The tendency to stay on track with their diversification decisions is another feather in the female cap.

A 2018 MassMutual survey on Women’s Retirement Risk found that women are more concerned about stock market volatility and portfolio risk than men. Some 78 percent of women, in fact, said they are either “very concerned” or “somewhat concerned” about market volatility, versus 65 percent of men. It also found that 48 percent of women were concerned about taking on too much investment risk, compared with 41 percent of men.

For many women, a balanced asset allocation that seeks to stabilize portfolio return is the answer. Indeed, the MassMutual study found women are more likely than men to describe their current investment mix as a balance of growth and preservation (42 percent vs. 32 percent), while men are more apt to describe their current mix as tilted towards growth (58 percent vs. 46 percent).

A balanced portfolio would include a mix of large capitalization, mid-capitalization, and small-capitalization stocks or mutual funds. It also includes exposure to domestic and international shares, growth and value, and fixed income, such as bonds and money market funds. A financial professional can help you determine what mix is right for you, which will depend on your age, assets, and tolerance for risk. (Learn more: Understanding your risk profile)

By comparison, male investors are more likely to overweight their portfolios in equities (stocks), a specific market sector (like energy or technology), or an individual stock, leaving their portfolio more vulnerable to market swings.

According to automated investing service Betterment, an analysis of its clientele revealed that its female customers changed their asset allocation 20 percent less often and monitored their accounts 45 percent less frequently than its male customers. Male customers also moved their allocation to 100 percent stocks at least twice as often as women and they were six times more likely to make massive allocation changes, such as switching from 100 percent stocks to 100 percent bonds or vice versa.5

“Both the desire to perform better than a buy-and-hold strategy, and the conviction that it’s possible and worth the effort, runs far deeper in men,” said Dan Egan, Betterment’s managing director of Behavioral Finance and Investing, in a news release about the research. “They can be more competitive, even when it leaves them worse off.”

Women save better than men

Equally critical in women’s capacity to outperform male investors is the discipline with which many women save.

The most recent Vanguard research revealed women are 14 percent more likely to participate than men in their workplace savings plan. Once enrolled, women also saved a larger percentage (7 percent to 16 percent more) of their paychecks than men at all income levels.6

Due to their lower incomes, however, and the increased likelihood that they will exit the workforce early to care for children or aging parents, female investors still have far less tucked away for their retirement.

The most current data from the Center for Retirement Research found that the median 401(k)/IRA wealth for individuals with balances who are 65 and older is $50,000 for women, both married and single. That compares with married men in that age group who had $113,000 saved in tax-deferred accounts, and single men who had $119,000.7

Hounsell said she believes that most women are keenly aware of the financial risk they will face, which motivates them to save and to become more confident investors.

Statistically, women outlive men by nearly five years, so they need more money tucked away for living expenses during retirement. That’s hard to do on smaller incomes.

Women also incur higher medical costs as they age and are more likely to require assisted living services, particularly after their spouse passes away, said Hounsell.

Moreover, they are much more likely than men to put their careers on hold to become caregivers to children and aging parents, which sets their savings (and the size of their future Social Security benefit) back further still.

“For many women, it’s a bigger battle to build up savings, so there is this mentality that they need to be more careful with their money,” said Hounsell.

Without a plan to save and invest for growth, she said, women can easily outlive their assets.

“Women are more worried about running out of money in retirement,” said Hounsell. “They’re starting to pay more attention.”

The MassMutual survey on women and retirement found just 47 percent of pre-retired women are confident that their income will last their lifetime, compared with 64 percent of pre-retired men.


It doesn’t take an economics degree to become a successful investor. It just takes a willingness to learn.

By educating yourself about investment options and strategies, you can start building wealth with greater confidence.

Don’t be afraid to contact a financial professional along the way for guidance, which, for the record, is also something that women do better than men.

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1 Fidelity, “Who’s the Better Investor: Men or Women?” May 18, 2017.

2 Barclays, “Are women better investors?” March 1, 2018.

3 University of California, Berkeley, “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment,” 2001.

4 Wealthsimple, “How We Really Feel About Money, In a Few Simple Steps,” September, 7, 2018.

5 Betterment, “Data Suggest Women Are Better (Behaved) Investors,” March 3, 2015.

6 The Vanguard Group, “Women versus men in DC plans,” 2015.

7 Center for Retirement Research at Boston College, “Survey of Consumer Finances,” 2013.

The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.