Women Better at Saving and Investing Than They Think

If you think men have greater success than women when it comes to saving and investing one’s money, a study from Fidelity may surprise you.

When asked who they believed made the better investor this past year, even women thought they would not outperform men, with only 9% choosing women. But an analysis of more than eight million clients from Fidelity shows women actually tend to outperform men when it comes to generating a return on their investments.           

Regardless of education levels, personal or professional achievements, many women still have doubts about their ability to invest effectively. When asked what financial life skills they wished they learned earlier, the number one answer was “how to invest and make the most of my money.”

But findings show women have learned far more than they realize. Fidelity Investments client data analysis shows on average, women performed better than men when it comes to investing by 40 basis points, or 0.4%. At first glance this may appear to be a minor difference, but can have a significant impact over time.

Fidelity’s analysis also found that when comparing annual savings rates, women come out on top. Looking specifically at workplace retirement accounts, women consistently saved a higher percentage of their paychecks than their male counterparts at every salary level. Women saved an annual average of 9% of their paychecks, compared to an average of 8.6% saved by their male counterparts. Looking at accounts outside of workplace savings, such as IRAs and brokerage, the data showed that in proportion to their account balances, women saved more. Women added an average of 12.4% to their account balance, compared to 11.6% for men.

Over the past three years, Fidelity has seen the number of women investing their money with the firm grow significantly—by 19%, to more than 12 million.

NEXT: Women’s skills and strengths

Despite their own perceptions that they may not be prepared to manage their personal finances, when women invest, Fidelity’s customer analysis shows many of the characteristics some view as being inherently female are actually factors that may be helping women see strong returns on their investments.

For example, women plan with purpose and think holistically. Women often build financial plans in terms of life goals for themselves or their families, rather than focusing on performance alone. Women tend to hold a more long-term, conservative view with their investments, tending to buy and hold stocks, versus taking quick action during market fluctuations.

Women take on less risk. They are more likely to have their savings allocated in a more age-based allocation of investments than their male counterparts. Looking specifically at Fidelity retirement savings accounts over the last three years, the percentage of women allocated appropriately for their age has increased by approximately 40%. Furthermore, fewer women have their savings fully invested in equities than men (which could represent too much risk and not enough diversification); and women are more likely to invest in target-date funds, ensuring they are well diversified.

Women practice patience. When comparing likelihood to buy/sell stocks, Fidelity’s client data revealed that men are 35% more likely to make trades than women. Furthermore, men who trade made an average of 55% more trades in 2016 than their female counterparts.

Fidelity’s experience has shown that taking part in live and digital events designed as part of the firm’s women’s education program can be a catalyst to taking action. Fidelity has seen a 25% increase year-over-year in the number of guidance interactions among women participating in these opportunities.

“The results of Fidelity’s latest analysis reinforces that women too often underestimate their strengths as savers and investors,” says Alexandra Taussig, senior vice president of women investors at Fidelity. “It’s time to celebrate our abilities and maximize them by making a commitment to get more involved with our money.”

NEXT: Women want more financial education

Fidelity research among professional women across the country shows there’s no shortage of interest in learning more about financial management and investment choices, with more than 90% saying they want to learn more about financial planning. For many, this stems from a need to play ‘catch up,’ with a majority reporting a lack of opportunity to learn financial skills earlier in life.

While parents remain the top source of financial advice for most women, only 20% said they felt well-prepared by their parents to manage their finances as an adult. Even fewer said they learned about these topics in school. Only 24% learned about budgeting and setting financial goals; 14% said they learned about investing. Overall, only 9% of women said their education through high school left them well-prepared to manage personal finances as an adult. A slightly better 10% said this of their college education.

Today, 88% of women say more financial education would provide them with greater confidence in managing their money. When asked what they would most like to learn with 60 minutes of professional financial advice, women across all generations listed ‘learning more about how to invest my money’ as their No. 1 choice.

But many still hesitate to reach out for help. Women across all generations are less likely to reach out to an adviser than men, with six out of 10 saying they have never consulted with a financial professional. Among this group, the top reason why was feeling like they didn’t have enough money. Other barriers holding women back from addressing their finances: not knowing where to start and simply not making it a priority.

Results of the survey are based on an online omnibus conducted among a demographically representative U.S. sample of 2,995 adults comprising 1,496 men and 1,499 women 18 years of age and older.