008: Here's Why Women Are Better Investors Than Men

Research shows that, on average, women invest better than men. Despite a growing body of evidence to suggest that women are gifted at investing, there is still a lack of confidence regarding the subject. If women will engage in the process of learning investing, like they have saving and budgeting, all signs point to the fact that they will be tremendously successful.

The Wage Gap

Women are paid 20 percent less than their male counterparts performing the same job, according to the Institute For Women's Policy Research. That is, for every dollar earned by a man working full-time, year-round, a woman working full-time, year-round earns $0.76. Although women are the ones signing up for 401(k) plans at work and saving a larger piece of their salaries, they have lower retirement account balances, on average, because they generally earn less than men overall, according to a report by the Vanguard Center for Retirement Research.

The Opportunity Gap

The unfortunate truth is, women are less likely to hold senior management positions in major companies than men. Fidelity reports that at 60 years old, 60% of women are still working in the individual contributor roles that they started in, rather than being promoted to management roles. Interestingly enough, research also shows that more women are graduating with professional degrees than men. "Since 2000, one-third more women than men have graduated from college, and more women are earning graduate degrees, too," reports Fidelity. This means that women are not only positioned to succeed as investors and financial planners, but actually outperform men who are working in the same fields.

Gender Investment Gap

We talked about the gender pay gap and the opportunity gap, but there is another gap that women are not taking advantage of, and it’s holding them back from reaching their financial goals. That something is investing. And this “gender investing gap” is something women need to overcome. So how do you start? Dustin Granger CFP® and I talk about how and why women should start handling the investments.

Who's the better investor? Women of course

Nearly 90% of women are going to have to take sole control over their finances at some point in their lives, suggests Fidelity Financial. Knowing this, it is important for women to start taking on investment responsibilities and learning more about investing. Dustin Granger CERTIFIED FINANCIAL PLANNER™ says many his women clients take more financial advice than his male clients. Woman statistically save more, think long-term and adopt a "buy and hold" approach. Men tend to be more focused on the day to day moves while women acknowledge volatility as short-term and move past it. “Money is like a bar of soap,” says Dustin Granger CFP® “the more you handle it, the more it disappears.” Women also have different motivations for investing. If men regard their stock picks as a sport that comes with bragging rights, most women do not attach money to status, which leads to less emotional investing decisions long-term.

 

Outline of This Episode [5:30] The wage gap women face [7:15] The opportunity gap [9:30] What is the gender investment gap? [11:00] discussing money with friends [12:00] All signs point to woman as better investors [13:45] In 40 years, women will control 40 trillion of intergenerational wealth [15:30] Dustin Granger CFP® on why women make better investors [21:15] How to balance financial roles with your spouse [22:15] Traits that make women better investors [29:15] How women can start the investing conversation Resources & People Mentioned Payscale.com Russell Investment Research Life planning template Fidelity.com Connect With Danielle and Dustin Send us your questions On Facebook On Twitter Connect with Dustin on Twitter: @DRGranger