Investing can play an important role in building long-term wealth, but many women hesitate to invest or feel they need more knowledge or money before getting started. That hesitation can have lasting consequences, particularly for women who may have fewer years in the workforce, longer retirements to fund or career interruptions to account for.
The good news? You don’t need to be an investing expert or have a large amount of money to get started. With a thoughtful plan, consistent contributions and the right guidance, investing can become an important part of your long-term financial strategy.
What Is the Gender Investing Gap?
The gender investing gap refers to the difference in stock market participation between men and women, even when women control a comparable or greater share of household assets. Women hold a significant share of U.S. household wealth, yet they continue to participate in the stock market at lower rates than men.
Several factors can contribute to this gap over a lifetime:
- The pay gap: Differences in earnings over a career can mean fewer dollars available to save and invest.
- Career interruptions: Time away from the workforce for caregiving can reduce years of contributions and opportunities to receive employer matching contributions.
- Longevity: Women generally live longer than men, which can mean retirement savings need to support more years of expenses.
- The cumulative effect: Differences in earnings, career opportunities and investment participation can contribute to a retirement savings shortfall over time.
These factors don’t make building wealth impossible. They make it especially important to start planning early, invest consistently and account for the financial realities that may affect your long-term goals.
Why Don’t More Women Invest?
Several factors can make women less likely to invest. These barriers aren’t necessarily about ability. In many cases, they’re about confidence, access and knowing where to begin.
Confidence, not competence
Many women report feeling they don’t know enough about investing to make good decisions. Some investing behaviors, including researching investments thoroughly, trading less frequently and taking a long-term approach, can support more disciplined investing.
In other words, you don’t have to know everything before you begin. Building your knowledge over time and working with a trusted professional can help you make informed decisions with greater confidence.
The belief there isn’t enough money to start
It can be easy to feel you don't have enough money saved to make investing worthwhile. But investing doesn’t have to start with a large amount.
Many retirement plans and investment accounts allow contributions in a range of amounts. Starting small and contributing consistently can give your money more time to potentially benefit from compounding.
An industry that hasn’t always spoken to women
Financial services have not always addressed the unique financial experiences and priorities women may have. While that is changing, women may still have fewer opportunities to see investing explained in a way that feels relevant to their goals, experiences and life stages.
The right financial guidance should start with your individual circumstances, not a one-size-fits-all approach.
Can Women Be Successful Investors?
Women can be successful investors, and certain investing behaviors can support long-term investing success.
For example, disciplined investors may:
- Trade less frequently, which may help reduce transaction costs and the potential impact of poorly timed decisions.
- Take a longer-term approach, rather than reacting to short-term market movements.
- Prioritize diversification, which can help spread risk across different investments and market conditions. It’s also an important part of managing investment risk.
The takeaway isn't that one gender is inherently better at investing. Disciplined behaviors, such as staying invested, maintaining diversification and avoiding emotional reactions to market volatility, can support long-term investing success.
If you already bring some of these habits to your financial decisions, you may have a strong foundation to build on.
How Can Women Start Investing With Confidence?
Getting started doesn’t have to be complicated. A few practical steps can help turn uncertainty into a plan.
1. Define your goals and time horizon.Start by identifying what you're investing for and when you'll need the money. Financial planning can help you prioritize your goals and determine how investing fits into your overall strategy. Retirement, a home purchase and a child's education can each require different investment strategies and levels of risk.
2. Start with what you have.You don’t have to wait until you’ve accumulated a large amount of money. Contributing consistently, even in smaller amounts, can be more valuable than waiting for the “right” time to begin.
3. Automate your contributions.Setting up recurring contributions to a retirement or investment account can make investing part of your routine. Automation can help remove some of the guesswork and keep you moving toward your goals.
4. Get familiar with the basics.Understanding the fundamentals, such as the differences between stocks, bonds, mutual funds and target-date funds, can make it easier to evaluate your options and ask informed questions. Learn more about stock market terms every investor should know.
5. Talk with a financial professional. You don’t have to navigate investing on your own. An advisor can help translate your goals into an investment strategy based on your timeline, financial situation and tolerance for risk.
What Financial Considerations Are Especially Important for Women?
Investing is personal, and women may face financial circumstances that are important to consider when developing a long-term strategy.
- Longevity:Women generally live longer than men, which can mean retirement savings need to provide income for more years. Planning for retirement can help you prepare for a longer retirement, while your investment and withdrawal strategies should account for that extended time horizon.
- Career and pay interruptions:Time away from the workforce for caregiving can mean fewer years of contributions and employer matching. A financial plan can help account for these interruptions and identify opportunities to make up for lost savings when possible.
- The impact of the pay gap:When earnings are lower over the course of a career, the same savings rate can result in a smaller retirement balance. This makes early, consistent investing particularly important.
- Widowhood and divorce:Some women become responsible for making financial and investment decisions later in life, sometimes following a significant life transition. Having a working understanding of your finances and an established financial plan before such a transition can help provide greater confidence and preparedness.
- Being a first-generation investor:If you’re the first person in your family to manage investments, you may not have a family member or mentor to turn to for guidance. That’s where education and a trusted financial professional can make a difference.
None of these considerations mean women need a completely different approach to investing. They simply reinforce the importance of creating a strategy that accounts for your goals, financial circumstances, timeline and the life changes you may encounter along the way.
Why Work With an Advisor as a Woman Investor?
Investing advice isn’t one-size-fits-all. An advisor can help you develop a strategy around your goals and adjust that strategy as your financial life changes.
A dedicated wealth advisor can help you:
- Build a plan that accounts for caregiving, career breaks, longevity and major life transitions
- Visualize how your long-term strategy can support the future lifestyle you envision and the people you care about
- Translate investment concepts into decisions that align with your specific goals
- Adjust your strategy as your income, family or priorities change
- Stay focused on your long-term plan during periods of market volatility
At Hancock Whitney, our wealth management team works with clients at every stage of their investing journey, from setting a first investment goal to managing a multigenerational portfolio.
Frequently Asked Questions About Women and Investing
What percentage of women invest in the stock market?
Women continue to participate in the stock market at lower rates than men, despite controlling a significant share of U.S. household wealth.
Why do women invest less than men?
Several factors may contribute, including lower confidence in investing knowledge, the belief that a large amount of money is needed to get started and an investment industry that has historically been less focused on women’s financial experiences. Differences in earnings and career interruptions can also affect the amount of money women have available to invest.
How much money do I need to start investing?
There’s no single amount that applies to every investor. Many retirement plans and investment accounts allow contributions in a range of amounts. The important thing is to choose an amount that fits your financial situation and contribute consistently when possible.
When should I consider working with an advisor?
A wealth advisor can be helpful when you're developing an investment strategy, navigating a major life transition or adjusting your plan as your financial circumstances change. An advisor can help you evaluate your goals, timeline and risk tolerance and develop a strategy around your individual needs.
Start Building Wealth With Confidence and Hancock Whitney
Whether you're making your first investment or refining a strategy you've had for years, you don't have to navigate your financial future alone. Hancock Whitney's Wealth Management team can help you build an investment strategy around your goals and provide guidance as your financial life evolves.
Ready to take the next step? Connect with a Hancock Whitney wealth advisor to talk about your goals and create a strategy designed around your financial life.
