More than a third of American women are now their family breadwinner. Women with college degrees far outnumber their male counterparts in the workforce. And surveys reveal that around 90 percent of women identify themselves as the primary bill-payer and budget-maker for their household. But despite all of this, women continue to lag behind in investing and long-term financial planning.
So what gives?
According to a report in The Wall Street Journal, women may differ from men in how they relate to investing. “Investing is not a hobby or sport for women,” Karin A. Risi, principal at the Vanguard Group’s Asset Management & Advice Services division, told the Journal. “But because financial services have long been male dominated — and because men respond to it that way — much of our industry treats it that way.”
Risi also says that, rather than thinking of investment portfolios in terms of comparative performance, women relate more concretely to how their investments will help them achieve long-term financial goals, like saving for a college fund or preparing for retirement. And because women tend to be more goal-oriented in their financial strategy, Risi has found that “in general women, more than men, are disciplined thinkers, good long-term planners.”
And according to an index from the firm Rothstein Kass, female hedge fund managers produced a return of nearly 9 percent through the third quarter of 2012, while men topped off around 3 percent in the same time frame, according to the HFRX Global Hedge Fund Index.
So, paradoxically, women are good investors who just don’t invest.
But it’s not a hardwired gap — many women are less confident building an investment portfolio because they were historically excluded from such decisions. “We’re fighting against centuries of societal norms in which women were excluded from discussions about finances,” Amanda Steinberg, the CEO and founder of a women’s personal-finance online community, told Time Magazine. “Many women think that since they don’t know the language, they can’t ask questions — or they worry that their questions sound dumb,” added Eileen O’Connor, the vice president of wealth management for McLean Asset Management Corporation.
But that’s changing as financial service groups — eager to make a buck off a growing number of female investors — are shifting strategies to accomodate what they see as women’s unique planning needs. “Companies which encourages clients to make investments based on social trends and themes, or Betterment, which keeps clients on track with meeting their goals, are reaching out to women by focusing on their personal interests and long-term goals,” according to the Journal.
The other tip for increasing women’s investment confidence? As they say: Knowledge is power. Even small steps like reviewing financial statements on a monthly basis and scanning investment websites can go a long way toward demystifying long-term financial planning and help you build your investment portfolio, experts say.