Spread the love

Should Women Be Investing Differently from Men?

No, women do not need a fundamentally different set of financial rules, but they often face unique life factors like longer lifespans and career gaps that require tailored planning. Data shows that general investing fundamentals apply to everyone, though behavioral tendencies differ between genders.

Women consistently outperform men as investors. Analysis from the University of California, Berkeley around 35,000 households, and a similar study from the Warwick Business School, showed female investors earned roughly 1–2% higher annual returns. Over decades, that difference compounds into a powerful advantage. This pattern is repeatable and data-backed, extending across individual and professional investors alike.

Among professional managers, the same results appear. A 2022 analysis by Investment Metrics of 90 global equity portfolios found women-led teams lost just 2.6% in a down market versus 5.9% for male-led teams—a significant difference in asset protection. A Goldman Sachs Asset Management article reported female-managed funds are 10% more likely to outperform benchmarks compared with male-managed funds. Gender-balanced private equity management teams achieved up to 20% higher returns, according to this International Finance Corporation and World Bank study, than male dominated ones.

Despite these outcomes, women remain underrepresented in financial decision-making. In my work with families across South Georgian Bay, I’ve noticed that in many households, the male partner still takes the more active role. According to a Morningstar report, women portfolio managers have been decreasing and account for just 11% in the US. This is despite women getting better results.

The Financial Consumer Agency of Canada reports women underestimate their financial knowledge by 23.5%, despite having strong results. And nearly 90% of Canadian women will manage finances on their own at some point—three-quarters as widows, often by their mid-50s, according to this study from Vanier Institute. Confidence before that moment matters far more than making up for lost time after it.

Why Investing Like a Woman Could Be Crucial for Your Portfolio

While men have long dominated Wall Street, the numbers tell a different story about who makes better investment decisions. Women investors consistently outperform their male counterparts—and it’s not even close.

For women, “the lower turnover, long-term consistency, and behavioral steadiness tend to result in fewer costly mistakes and greater compounding, which typically lead to stronger returns,” Hilary Hendershott, a certified financial planner and founder of Hendershott Wealth Management, told Investopedia.

Slow and Steady Wins the Race

Study after study confirms that women tend to get better results when investing. A landmark 2001 study by researchers at the University of California, Davis, often cited in behavioral finance research, examined more than 35,000 households and found that excessive trading by men reduced their returns by 2.65 percentage points, compared to 1.72 percentage points for women.

In 2018, researchers at Warwick Business School in England found that investing returns for women outperformed those for men by 1.8 percentage points on average.

Recently, a 2025 Wells Fargo analysis of more than 50,000 accounts from 2018 to 2024 found that single women achieved higher risk-adjusted returns than single men while taking on less risk. Female-led joint accounts topped all categories.

The reasons for this pattern are linked to psychology, socialization, and behavior, Hendershott said. She also noted that women are less likely to be raised to see themselves as investors, so they tend to approach investing with some humility. Once they start investing, they’re more likely to choose a growth or target-date fund and then leave it alone.

Stephanie McCullough, founder of Sofia Financial, said women are often labeled as risk-averse, though she prefers to say they’re more “risk aware.” “They really want to understand the risks they’re taking,” McCullough said, adding that women tend to do a bit more research before investing.

Once women understand what they’re buying, they “kind of fix it and forget it,” McCullough said. Many are willing to stick with their investment plan rather than act on tips or gut feelings, she said.

In addition, men often gain a “social reward for fixing things, solving problems, and being aggressive,” Hendershott said. That can translate into action-oriented investing, such as trading frequently and trying to beat the market.

The Investment Gap Persists

The wealth disparities by gender remain stark. According to a 2023 Bank of America report, the average 401(k) balance for men was 50% higher than for women.4 Vanguard’s 2025 retirement plan data show that women’s median 401(k) balances were about 30% lower than men’s, even though both groups contributed at similar rates. This points to a persistent gender gap in retirement savings.

The reasons are both cultural and financial, Hendershott said. “Women tend to earn less, have less disposable income to save, and start investing later,” she said. That’s partly due to the gender pay gap and partly due to long-standing beliefs about money and women’s confidence in their ability to invest.

Media also plays a role, McCullough said, often highlighting ways for women to cut expenses, while stories geared toward men tend to focus on how to beat the market.

Best Practices

When it comes to investing, men and women can learn from each other. From women, men can learn the power of patience and humility, Hendershott said. “You don’t need to outsmart the market,” she said. Studies consistently show that, on average, women’s buy-and-hold approach and lower trading frequency are associated with better long-term results.

From men, women can learn the value of starting early, saving consistently, and claiming ownership over their financial futures, Hendershott said. “You don’t need permission to build wealth,” she said. “You don’t have to master every financial term or predict every market turn.”

The stock market is the greatest generator of individual wealth in human history, Hendershott said. The most effective investors, regardless of gender, do several things well, she added: They stay invested long-term, they avoid unnecessary trading and keep costs low, and align their strategy with their actual goals, rather than with news headlines. Data shows that investing habits often linked to women, like trading less often and taking disciplined risks, are connected to better long-term returns.

What Every Woman Needs to Know About Investing

Financial equality and independence are important for women. And in many countries, women have more financial decision-making power than ever:

Women are earning more.
Controlling more wealth.
Inheriting more.
And starting more businesses.

Yet there are still many gender financial gaps that cost women time and money. These can include the wage gap, investing gap, caregiver gap, pricing gap and others. These gaps can add up to a very real gender wealth gap – and that can have a big effect on your financial future.

How can women close the wealth gender gap?

To build financial security and well-being, it’s essential for women to save and invest their money. The sooner you start, the more you can grow your savings through the power of compounding. You can also take advantage of the fact that on average markets tend to rise over the long term.

And no matter what you currently do or don’t know about investing, as a woman you may already hold some of the keys to investing success. Studies confirm that women often make better investors than men.

In one study from August 2014 to August 2017, women saw their investment portfolios grow 0.81% more on average than their male counterparts each year.
If that performance continued for 30 years, women would end up with 25% more in their portfolios than men.

Three strengths women have as investors

Studies show women are patient investors, trading less often than men. One survey of women investors found that 50% of respondents consider their patience and willingness to wait for their investments to grow as their biggest strength. And 45% considered themselves disciplined investors. More specifically, they indicated their greatest investing strength was being able to “stick to a plan and avoid emotional or impulsive decisions.”
Instead of trading often, women tend to develop a strategy and stick to it, buying and holding for the longer term. Less trading leads to lower costs, so you keep more of your investment earnings. Here’s what one classic study of stock-picking by gender found over several years:

Single female investors outperform single men by 2.3%.
Women overall outperform men by 1.4%.
Men underperformed because they traded 45% more than female investors.

Women are more likely than men to diversify their investments. They may do this by choosing investments that contain a diversified mix of stocks and bonds, such as target date or balanced funds. Or they may hold a mix of different types of funds – which spreads their investment dollars across multiple holdings within each fund.

Some 44% of women have either most or all of their portfolio in funds – compared with 38% of men.

Women tend to be more risk aware when they invest. They take the time to evaluate whether the reward justifies the risk. They also tend to pause to assess potential drawbacks before diving in.

Women in one study were 50% less likely than men to suffer a loss of 30% or more – a finding that is directly related to women’s choice of lower risk investments.

Everyone is capable of improving their financial future and investing knowledge. That’s true whether you want to learn the basics of investing or are ready to explore more advanced investing strategies.

Working with an advisor can also help investors recognize their strengths and, more importantly, the weaknesses that stop them from making sound investment decisions.

By investing in yourself, you can start to close the gender wealth gap – and take charge of your financial future.

FAQ

Why do women invest differently than men?

However, there is a large body of research suggesting women’s tolerance to investment risk is less than that of men (with single women having the lowest risk appetite and single men the highest), which could threaten their ability to build a sufficient savings pot to see them through life’s challenges.

Which gender is better at investing?

Studies show women investors outperform men on average, mainly due to behavioral differences rather than stock selection. Women are more likely to take a long-term, disciplined approach and trade less frequently. Lower turnover helps reduce costs, minimize mistakes, and improve compounding over time.

Are women generally better investors than men?

Yes, studies show that women tend to achieve slightly higher average annual returns than men, outperforming them by roughly 0.4% to 1.8%. This difference comes down to behavioral habits rather than stock-picking skill.

Why should women invest?

It helps you ride the market ups and downs, and the longer you leave your money invested, the more opportunity it has to grow. You also don’t need a lump sum, investing small amounts regularly can be a great way to get started.

Sources: rbcgam.com, investopedia.com