Do women make better investors?

When it comes to industries, the investment industry is one of the more male-dominated around. Because of this, many people just assume that men are better investors.

But what if this widely held belief isn’t true?

According to data from US financial services giant Fidelity Investments, women are actually superior investors.  At least that’s what US data appears to show.

The study, which looked at over 5 million US investment accounts from 2011 to 2021, found that women’s portfolios beat men’s by an average of 0.4% annually. While 0.4% might sound small, over a lifetime of investing it adds up to a serious advantage.

This finding is particularly relevant as the financial landscape evolves, with women increasingly becoming the custodians of financial assets. On average, women live five to six years longer than men, inherit wealth and make critical financial decisions. Because of this shift, it’s crucial to understand how they approach investing, the challenges they face and the misconceptions that continue to linger.

What is it, exactly, that makes women better investors?

Research points to three standout habits:

1. Planning with purpose: Women tend to think much more “holistically” about their investments and build their financial plans around life goals rather than trying to beat the market. They are also more likely to adopt a buy-and-hold approach, avoiding impulsive decisions. According to Fidelity, 51% of women stayed invested during volatile markets compared to 43% of men, enabling them to ride out market fluctuations and capture long-term gains.
2. Managing risk wisely: Women are less inclined to chase high-risk, speculative investments. Instead, they focus on solid financial strategies, which helps protect their portfolios from big losses during market downturns.
3. Trading less: Patience is a virtue – and in investing, it’s a superpower. Women trade 35% less frequently than men, meaning they avoid the pitfalls of overconfidence and excessive trading, which can erode returns.

While we don’t have the same detailed studies here in New Zealand, it’s likely New Zealand women share these same smart investing behaviours.

Unique challenges facing female investors

Of course, it’s not all smooth sailing. Women often face unique challenges when building wealth:

• The gender pay gap: While the gap has narrowed to 8.2% (down from 16.3% in 1998), women still earn less on average, making it harder to save and invest.
• Time out of the workforce: Many women step back from work to raise children, missing out on both salary and KiwiSaver contributions during maternity leave. Without government KiwiSaver contributions during this time, the gap widens even further.
• Smaller KiwiSaver balances: Despite being disciplined savers, women’s balances often lag behind men’s due to these structural barriers.

Bias in financial advice is another hurdle. Studies in the US show that many women feel patronised or excluded from financial conversations, which can undermine their confidence.

How advisers can make a difference

Financial advisers have a big role to play in levelling the playing field. Beyond offering expert advice, they can provide personalised support that addresses women’s unique needs and builds trust. While digital platforms and robo-advice have made investing more accessible, there’s still real value in working with an adviser who understands an investor’s goals and concerns.

By fostering a more inclusive environment, advisers can help close the wealth gap and empower women to take charge of their financial future. Whether it’s encouraging a buy-and-hold strategy or helping to navigate better returns through KiwiSaver, the right advice can make a world of difference.

Article credit: Damon O’Brien, Investment Director, Consilium.