Myth-Busting: The Reality of Female Investors and Financial Success

Unfortunately, certain negative myths about women investors persist, shaping perceptions and often positioning us as women to be under-served in the financial world.

As a female financial advisor and CERTIFIED FINANCIAL PLANNER® professional, I feel it is imperative that we shed light on these misconceptions and provide valuable insights into the true nature of women investors.

Myth 1: Women Are Cautious Investors Holding Too Much Cash

Reality: It's true that a reported 71% of women keep a substantial percentage of their assets in cash (Source: Ellevest). While this may seem like a challenge, it actually presents a significant opportunity for strategic financial planning.

On the flip side, more women than ever are taking a seat at the investing table. According to a study by Fidelity Investments, 67% of women are now investing outside of retirement, which is a 44% increase since 2018.  And 50% of women report being more interested in investing since the start of the pandemic.

By developing a tailored financial plan, we can help guide women towards a more diversified and growth-oriented investment approach helping them to feel more confident in their financial futures.

Myth 2: Women Are Lagging Behind in Wealth Growth

Reality: This statement is actually not true.  The truth is that women’s wealth is growing at a rate faster than ever.  In fact, Boston Consulting Group reports that women are adding $5 trillion in global wealth every year and are outpacing the growth of the wealth market overall.

Here in America, the Pew Research Center has found that even though the gender pay gap still hovers at women earning around 82 cents for each dollar earned by a male counterpart, 29% of wives earn the same amount as their partners in marriage, and in 16% of marriages, women are the primary breadwinners. 

These findings underscore the evolving landscape of financial empowerment and gender dynamics, debunking outdated narratives of women lagging behind in wealth accumulation.

Myth 3: Women Lack Confidence in Investing

Reality: This one is partially true.  42% of women feel confident in their ability to save for the long term, including retirement and only 33% feel confident in their ability to make investment decisions (Source: Fidelity Investments).  But that isn’t the whole picture.

As Axios points out, a lack of confidence does not equate to a lack in performance. It may just be a perception gap.  Very broadly speaking, men tend to be overconfident.  And that overconfidence can translate into men trading more — but oftentimes, that can lead to getting the timing wrong and losing money.  Whereas women, who tend to be more ready to admit when they don't know something, may be more apt to buy and hold.

The confidence gap is a noteworthy aspect here, emphasizing the need to empower women to recognize and feel confident in their investment prowess.

Myth 4: Women Don't Know How to Start Investing

Reality: This may not actually be a myth.  Research reveals that many women want to invest, and they want to work with an advisor, but they may lack guidance on where and how to start.  Addressing this gap is crucial.

Fidelity Investments reports that 77% of women believe that if they had a financial advisor to help them invest, they’d be more confident about their financial future.  And 71% said once they had set up a financial plan, they felt more confident.

This right here is why I do what I do.

I firmly believe that by providing accessible financial education and advisors who serve women, we can empower more and more of us to navigate the investment landscape with confidence.

It's time to dispel these myths and recognize the true potential of women investors.  I believe that as an industry, we must acknowledge women’s financial acumen, learn how cater to their unique needs and actively work to bridge the existing gaps. By providing holistic advice, valuable tools and tailored services, we can empower women to take charge of their financial future with confidence.

Any opinions are those of Lauren Smith and not necessarily those of Raymond James.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.