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Women and Wealth Series Part III: Women and Investing

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Hetty Green was the wealthiest woman in the world when she died in 1916. She had turned a $6 million inheritance into the equivalent of about $2 billion. How did she do it? Real estate, stocks and bonds. Her nickname – The "Witch of Wall Street"  though born out of Green’s penchant for wearing black widow attire, reflected society’s uncompromising disapproval of the female investor. She was cast as uncharitable and a bad mother who only loved money. In about every way, the Witch of Wall Street failed to meet social expectations of women.

Times have changed, epitomized by the appointment of women to some high-profile positions. Adena Friedman, for example, became the first woman leader of the NASDAQ exchange in January 2017. And Stacey Cunningham became the president of the New York Stock Exchange in May 2018, the first woman to hold that position in the 226-year history of the institution. Beyond Wall Street, the past decade has also seen Christine Lagarde run the International Monetary Fund and Janet Yellen serve as the first female leader of the United States Federal Reserve.

If these high-profile leadership positions indicate that the stigma around female investors and financial gurus has changed significantly, it masks the overall underrepresentation of women in finance. While women comprise 46 percent of employees in financial services, their number declines to 15 percent at the executive level. Less than 20 percent of Chartered Financial Analysts (CFAs) are women.

The reasons behind the gender gap in finance lie outside this blog, but the gap correlates with one area of the economy where women still lag behind men: investing. Specifically, women tend to start investing later in life and invest less of their income. They also lack confidence in their knowledge around investing and dislike volatility associated with it.

Ironically, once women do begin to invest, they consistently yield higher returns than their male counterparts. Data suggests that women are less likely to engage in high-risk, short-term investments than men. They prefer to educate themselves about investment options and commit to lower-risk, longer-term vehicles. If they can learn about investing in social environments, all the better. Women are also more likely to be purposeful in their investments, like being attracted to women-owned businesses or impact investment opportunities.

 
Women tend to start investing later in life and invest less of their income. They also lack confidence in their knowledge around investing and dislike volatility associated with it.

Ironically, once women do begin to invest, they consistently yield higher returns than their male counterparts.

    

Sounds familiar, right? In Part II: Women and Philanthropy, you will recall that philanthropic women have historically built a culture that echoes some of this behavior around investments: education, collaboration, and strategic impact. Women have been highly influential in philanthropy and the related non-profit sector, and they tend to have great confidence of their roles and responsibilities in those arenas. Their confidence is similarly bound to grow in the world of investments as the gender gap in the industry shrinks, creating fertile ground for women’s culture around financial decisions to flourish.

Next: Part IV: Women Entrepreneurs








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Investment products and services are:
Not a Deposit   •   Not FDIC Insured   •   May Lose Value   •   Not Bank Guaranteed   •   Not Insured by any Federal Government Agency

 
 

Equal Housing Lender Equal Housing Lender. Credit products are offered by U.S. Bank National Association and subject to normal credit approval. Deposit products offered by U.S. Bank National Association. Member FDIC.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.

Wealth Sustainability services are not fiduciary in nature, and Ascent serves in a non-fiduciary role when providing these services. Wealth Sustainability services may include strategic wealth coaching services in order to facilitate your self-assessment of wealth sustainability issues. Ascent does not engage in the practice of psychology.