The notion that a man should take care of money while a woman's role is to take care of the home is thankfully behind us. Unfortunately, its effects are still felt to this day. Taking interest in financial markets is still much more common among men than women.

The same goes for the professional field. Despite progress being certainly made, women are still outnumbered by men when in management and executive positions. Among the largest registered companies in the EU, around 33% of their directive boards are made up of women. However, still less than 10% of Executive directors are women.  Among investors, men dominate almost every category.

We Should Especially Take Care of Our Money 

Current data indicates that women should care about their finances even more than men. One of the reasons for this is the fact that for various reasons, women are more likely to become the victims of economic violence. But this is not the only factor working against women.

Earnings Disproportions…

On average women in EU earn 12.7% less than men. The situation of course varies across the EU, some countries like Romania, Italy or Belgium yield much better results than countries like Slovakia, Estonia or Austria.

It may seem that this phenomenon occurs mainly due to lower qualifications, profession preferences or larger family focus. However, this disproportion occurs on a similar scale between men and women of similar specialization, education and within the same fields.

This phenomenon, commonly referred to as the "pay gap", results, among others, from ingrained stereotypes in our society, lack of pay transparency, as well as greater involvement of women in family responsibilities.

…Including Pensions  

Combined with generally lower retirement age, the result in lower benefits for women than men in retirement. I have already written about our retirement prospects in one of my previous articles. Currently, male retirees above the age of 65 are by 11.4% better off when compared to women. And looking at the trends, the disparities are not going to disappear anytime soon.

Given these significant disparities, appropriate financial skills and taking specific actions to both protect against the effects of unforeseen events and ensure a secure future become even more important. But how does this look in practice?

How Do Women Invest?

All data indicates that women, for the most part, do not invest. When it comes to Finax clients, women account for around 34% of our clients. Certainly, an improvement compared to the past.  However, when we compare the situation on the whole society scale, it is more than unfortunate, especially since it turns out that women can be really good investors.

Fortunately, abroad we are slowly observing a positive trend. According to a 2023 study by the investment fund Fidelity, nearly 60% of women in the United States invest their savings in the stock market, which is an increase of 16 percentage points compared to 2018. The increase is mainly driven by women from the youngest generation. Another global study conducted in 2022 showed that of the 9,500 women surveyed, 72% invest at least once a month, and 16% invest a third or more of their monthly income.

Numerous studies confirm that, statistically, the investment behaviors of women and men differ. And although the most popular stereotype is that women are naturally less risk-averse, this myth has already been debunked in studies by E. M. Liu and S. X. Zuo from 2019. So, how does women's investing differ from men's investing?

How is Female Investing Different Compared to Males? 

• Less Emotions, Greater Persistence 

Primarily in strategy. According to a study conducted by the investment firm Fidelity in October 2023, what distinguishes female investors is their greater calm in the face of market declines. More than half (51%) of women investing in the market say they usually stay the course with their investments when the market experiences downturns, compared to 43% of men. This means they tend to stick more persistently to their chosen investment strategy and - contrary to popular stereotypes - are less likely to succumb to emotions.

Additionally, lower transaction frequency prevents additional costs, resulting in higher investment efficiency. It appears that Finax's philosophy of passive investment may be even closer to women, who find it easier not to yield to the temptation of making unnecessary changes to their strategy.

• Thoughtful Decisions 

Women are often characterized by lower confidence in the correctness of their investment decisions - according to BritainThinks, only 38% of women in their survey declared such confidence, compared to 53% of men. However, it turns out that this uncertainty can work in their favor.

Experts indicate that a lack of excessive confidence may lead female investors to seek more information about their investments, resulting in more informed decisions, less tendency to fall into investment bubbles, and less impulsiveness during market downturns.

• Better Results 

As a result, it often turns out that female investors achieve better investment results compared to male investors. A study conducted by UBS found that women achieved 1.8% higher returns than men.

Similar conclusions can be drawn from a study conducted by the investment bank Goldman Sachs, which found that 48% of hedge funds managed by women outperformed the market from the market bottom in March 2020 to August, compared to 37% of funds managed by men. Moreover, funds led by women performed better during the pandemic, which bottomed out in March 2020. Women achieved better results than men by 0.4% in an analysis conducted in 2021 on 5 million Fidelity clients over a 10-year period. A study conducted at the University of California, Berkeley, in the 1990s found an even greater difference in results of nearly 1%.

What About our Clients? 

Analyzing the topic of female investing, we’ve furthermore decided to take a closer look at how our female clients perform.

• Risk Approach 

It turns out that our female clients are slightly less risk-averse than men. In their investment strategies, they typically hold 71,7% of stocks in their portfolios, i.e., more risky financial instruments, while male clients hold an average of 73.3%. A slightly more conservative approach to risk among our female clients is also reflected in their predictions about their future behavior in specific situations.

• Expected Results 

Our female clients are more likely to declare that in the event of stock market declines, they prefer to maintain the current state of their portfolio (32.7% of women vs. 24.9% of men), while they are less likely to assume they would purchase additional securities in such a situation (66.9% of women vs. 74.9% of men). However, it is difficult to say whether or not will these declarations also reflect in practice. The latest research from MIT indicates that statistically, it this…men over the age of 45 who are the most susceptible to stock market panic.

• Investment Goals 

Female investors also have lower return expectations at Finax - around 64% of women expect high returns compared to 73% of men, while the rest would be satisfied with average or low returns. Differences also appear in the chosen investment goals - our female clients are more likely to save for retirement (26.2% vs. 25.2%) and less frequently - surprisingly - for the Future of children (16.4% vs. 19.5%).

Take Finances Into Your Own Hands

Becoming independent, securing your future, growing your hard-earned money. Buying a flat or children's education. There are countless reasons to invest.

Meanwhile, as research shows, women have a considerable but so far dormant potential for this. It is worth pushing beyond one’s limits and joining the group of investors who consciously take care of their finances and achieve success in this field. No one will do it for us.

How to Do It 

Even if you haven’t had experience with investing yet, everything is ahead of you. Finax was created to provide cheap, simple, and efficient investing for everyone - not just experienced investors. We believe that the key to success is a simple long-term investment strategy, and we recommend our clients to remain persistent and to not succumb to emotions. It turns out that women do not need to be reminded of this, and the data only goes to prove our point.

Regardless of whether or not you want to become our client, be sure to take care of your finances. If you feel that you lack knowledge in this area, we encourage you to use our educational materials. On our blog, you will find numerous articles advising on how to manage your money wisely.

If you have any questions, feel free to contact us at +421 2 3244 7760 or at client@finax.eu.