Women investors are more inclined to stick to their investment plan.2
Women tend to follow proven investment practices and have a more disciplined approach to investing.
Women are more risk-averse than men when it involves managing their individual accounts.
Women tend to achieve higher returns on their investments while taking on less risk.
Overcoming obstacles and building on strengths
Women investors are increasingly taking on important roles in managing their family's finances. Recognizing women's unique challenges and strengths when it comes to investing can help in preparing for retirement and achieving long-term financial goals.
Women tend to follow proven investment practices, such as creating an investment plan and working closely with an investment professional. Women’s disciplined approach and willingness to learn benefited returns in the long run.4
Women tend to be risk-averse. However, the risks women take are productive, as women’s returns lead men’s when adjusted for risk.2
Learn more about investing: Talking with an investment professional or a financial planner can help you understand the basics of investing — things like setting aside enough cash for an emergency, defining your time horizon and risk tolerance, and developing an appropriate asset allocation.
You can also learn about investing by reading financial journals, watching financial news channels to learn the industry terminology, or listening to investment-related podcasts or market updates on the radio.
Setting investment goals: Investment goals can be as varied as the people who define them, but they generally fall into the categories of income, growth, or a mix of the two. Moreover, each of your investment goals will generally have an associated time period that helps determine what type of assets you should potentially use to assist you in reaching your investment goals with the appropriate level of risk.
Understanding the strengths of women investors
Women comprise more than half of the U.S. population,1 but no two women are the same when it comes to managing their money. When we surveyed investors, women were optimistic about their ability to achieve short- and long-term investment goals and have become increasingly assured that the stock market is a good place to invest. We also found that women investors are more likely to work with an investment professional and more inclined to stick to their investment plan.2
At some point in their lives, most women likely will be in charge of their family’s finances.3 Women have increasingly become the sole or primary breadwinners for their families and often take a leading role in educating the next generation in financial matters. This report explores new trends in how women approach investing and offers guidance on how women can take advantage of their strengths as they pursue long-term financial goals.
9 out of 10 women eventually will take charge of their family’s wealth
44% of U.S. ultra-high-net-worth individuals are women
41% of women are their family’s breadwinner or co-breadwinner
Women control more than $10 trillion of U.S. personal wealth.
Women are expected to represent a $30 trillion wealth management opportunity by 2030.
Source: "Women’s Quick Facts: Compelling Data on Why Women Matter," STEMconnector®, November 2016; Statista Research Department, 2021. "Women as the next wave of growth in the US wealth management," McKinsey & Company, July 2020. Ultra-high-net-worth individuals are defined as individuals with a net worth of 30 million U.S. dollars or more; Center for American Progress analysis of data from the U.S. Census Bureau, 2019; New York Life Investment Management, 2020.
Asset allocation is an investment method used to help manage risk. It does not ensure a profit or protect against a loss. All investing involves risks, including the possible loss of principal. There can be no assurance that any investment strategy will be successful. Investments fluctuate with changes in market and economic conditions and in different environments due to numerous factors, some of which may be unpredictable.
Each asset class has its own risk and return characteristics.Alternative investments trade in diverse complex strategies that are affected in different ways and at different times by changing market conditions. Strategies may, at times, be out of market favor for considerable periods with adverse consequences for the investor. Bonds are subject to market, interest-rate, credit/default, liquidity, inflation, and other risks. Prices tend to be inversely affected by changes in interest rates. Credit risk is the risk that an issuer will default on payments of interest and/or principal. This risk is heightened in lower-rated bonds. Cash alternatives typically offer lower rates of return than longer-term equity or fixed-income securities and may not keep pace with inflation over extended periods of time. Real assets are subject to the risks associated with real estate, commodities, and other investments and may not be suitable for all investors. Stocks are subject to market risk, which means their value may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Real estate has special risks, including the possible illiquidity of underlying properties, credit risk, interest-rate fluctuations, and the impact of varied economic conditions. Other risks associated with investing in listed REITs include the use of leverage, unexpected reductions in common dividends, increases in property taxes, and the impact to listed REITs from new property development. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility.
Alternative investments carry specific investor qualifications which can include high income and net-worth requirements as well as relatively high investment minimums. They are complex investment vehicles which generally have high costs and substantial risks. The high expenses often associated with these investments must be offset by trading profits and other income. They tend to be more volatile than other types of investments and present an increased risk of investment loss. There may also be a lack of transparency as to the underlying assets. Other risks may apply as well, depending on the specific investment product.
S&P 500 Index is a market capitalization-weighted index composed of 500 widely held common stocks that is generally considered representative of the US stock market.
Wells Fargo/Gallup Investor and Retirement Optimism Index is a broad measure of U.S. investor confidence in the investing climate.
The Wells Fargo/Gallup Investor and Retirement Optimism Index was conducted August 5 – 14, 2016, by telephone. The index includes 1,021 investors randomly selected from across the country with a margin of sampling error of +/- four percentage points. For this study, the American investor is defined as an adult in a household with total savings and investments of $10,000 or more. About two in five American households have at least $10,000 in savings and investments. The sample size is composed of 71% nonretirees and 29% retirees. Of total respondents, 43% reported annual income of less than $90,000; 57% reported $90,000 or more.
1 U.S. Census, 2020: Women were 51% of the U.S. population.
2 Wells Fargo/Gallup Investor and Retirement Optimism Index, February 2021. Results for this Wells Fargo/Gallup Investor and Retirement Optimism Index are based on a Gallup PanelTM web study completed by 1,536 U.S. investors, aged 18 and older, from February 8 to 16, 2021. This quarter’s poll includes an oversample of Black and African American investors, resulting in a total of 573 Black and African American investors included in this survey. For this study, the American investor is defined as an adult in a household with stocks, bonds, or mutual funds of $10,000 or more, either in an investment account or in a self-directed IRA or 401(k) retirement account.
3 “Women’s Quick Facts: Compelling Data on Why Women Matter.” STEMconnector®, November 2016.
4 Fidelity, “The gender gap and retirement”, August 26, 2021.
Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly-owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.
Wells Fargo Investment Institute thanks Justin Kreiger, CFA, and John Morton, M.S., Ph.D., of Wells Fargo Wealth & Investment Management Analytics Group for the use of their research on “Gender Differences in Performance at Wells Fargo Advisors”.
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