In today’s post-feminist paradise, the media would have you believe that apart from the ability to bear childrWomen in the workplaceCredit: Image: Ambro / FreeDigitalPhotos.neten, there are no differences between men and women. With this in mind, can you imagine a man driving around in circles, too reluctant to admit his confusion and ask for directions? Now, could you imagine a woman doing the same thing? The answer is most likely to be “probably not.”

Interestingly, this stereotype may apply to the financial field as well.  By and large, male investors tend to make more aggressive decisions, take on greater risk, and act more independently.

This is borne out by women and investing statistics. An article in The Wall Street Journal noted that women’s risk-adjusted returns outperformed men’s by an average of one percentage point annually.  This is remarkable because women investors tend to trade less frequently than men and hold more conservative portfolios. 

While there are certainly exceptions, studies show that typically, women participate in less extreme behavior. They tend to wear seatbelts more than men, floss more frequently, and run yellow traffic lights less often.  This tendency towards safety may extend towards their outlook in investing as well.  By not assuming high levels of risk, women may limit their losses in down markets. 

The Challenges

While women tend to work for fewer years and earn less money, they live longer than men, and therefore have unique financial planning concerns.  Stretching income and retirement pensions is not just a matter of careful shopping, but is directly related to vigilant investing and implementing a financial plan.

For decades, the disclaimer on the bottom of financial documents read, “Past performance does not guarantee future results.”  Those words may ring even louder in today’s global recession.  While traditionally stocks have been the asset class that outperformed all others, it may be difficult to continue (or increase) investing in the market when you might be suffering from the sting of real losses.  And, while the relative safety of fixed-income investments such as bonds might be enticing, the security they offer may not be enough to keep ahead of inflation and retain your purchasing power throughout retirement. 

 If you are a woman, or you care about a woman, forget about the political correctness of “gender neutral” while considering investment needs.  A unisex investment portfolio might not be the best possible fit.  By recognizing the challenges women face in investing, it is possible to overcome them by following the most appropriate investment strategies.

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Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.