What makes women’s wealth journey different?
Many women’s life events and situations raise barriers to the creation of wealth. Apart from pay differences, career breaks and the greater need to work flexibly for childcare can also have a detrimental impact upon wealth. On average, women also tend to live longer than men, so their wealth-planning needs must often span a longer time horizon.
Often women are more reluctant to take financial risks than men, according to various research papers. This can also be seen in women’s pension allocations, which often favor bonds versus equities. According to a recent Nutmeg survey, just 3% of women are comfortable taking risks to achieve a good return, compared with 26% of men.
Women tend to invest with purpose
Women are twice as likely as men to say that it’s extremely important that the companies they invest in incorporate environmental, social, and governance (ESG) factors into their policies and procedures. This suggests to us a tendency of women to invest with purpose, where purpose represents both their goals as well as their values and impact on society.
Once women do invest they tend to perform better than men
Women also seem interested in investing in women. For example, in crowdfunding we see more women investors investing in women-led startups. Once women do invest, they tend to perform better than men. A recent study by the Warwick Business School concluded women outperformed men at investing by 1.8% per annum.
Women tend to be more disciplined when investing
Women also display less disposition bias, i.e., the tendency to sell at lows. During major drawdown events, the data suggests that women are around 25% less likely to withdraw their investments than men.
Women tend to spend more time researching information
Women also spend more time researching information, are more likely to follow a plan, and less likely to try to time the market. They also benefit from more diversified portfolios. Thus, while men tend to put more weight on pure performance and make investment decisions based on historical performance, women tend to prioritize risk reduction and positive impact.
Sustainable investing strategy consideration
Female investors appear to be more inclined to invest based on their values
Source: Investor Sentiment Survey, Global Results, years 2020, 2019, 2018;
Charts based on 2020 Investor Sentiment Survey results