How Do Women Really Invest?

A closer look suggests that income, rather than gender alone, may be the real determinant of women's investing choices

Christine Benz 8 March, 2021 | 11:09AM
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“Women invest less aggressively than men.” How many times have you heard that assertion? And indeed, numerous studies point to women putting less money in the stock market than men. 

But a closer look at the data suggest that women’s lower average incomes - rather than gender-related risk preferences - are the key driver behind their lower average allocations to stocks. Women earn less, on average, than men. And not surprisingly, people with lower incomes invest less in stocks than do higher-income people. That skews the data on women’s average savings rates and equity allocations downward. But after controlling for income, it appears that women contribute as much to their retirement accounts and invest just as much in stocks as men at the same income levels.

That suggests that the key area of concern for women’s financial health relates to income rather than any sort of risk aversion that’s specific to women.

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About Author

Christine Benz

Christine Benz  is director of personal finance at Morningstar and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances.