But do women invest in the same way as men? There is little recent data. However, historical surveys have shown that men are generally more cavalier about risk than their female counterparts. A University of California study called Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment found in 2001 that women outperformed men in the market by one percentage point a year because, they said, men were much more likely to be overconfident and make rash decisions that cost them money.
MS. TURLINGTON BURNS: You're further ahead than I was. I ran my first marathon in 2011 and we were given ten spots for a very new charitable organization as part of the New York City Marathon. And I thought, "Well, I know some runners, and I can't not run it as the head of this organization." So, I signed up, and immediately when I started training I saw the connection between what we're trying to do, where there is need, and where there is really an intense barrier, which is distance, and how we can connect the dots there. So, I ran the first one and then I thought, "Oh yeah, I have two kids. I think I could do that two times." And then it just started to grow, and it's turned out that there are a lot of runners out there, or people who are just—I think people who are taking care of themselves and are active, healthy people, are more likely to care about the health and wellbeing of others, than your average person. So, we found that it's been a very connective, very community-building type of event, and people go couch to marathon, or they walk, cycle, you know, anything that you do already there's a way that you can contribute that effort towards other people.
This problem may also result from a reluctance to talk about money. Women talk about marriage, kids, college, politics, religion, shopping and sex, but money matters tend to be taboo. “Men have no trouble talking about money, but it’s the one thing that women are hesitant to discuss,” says Zaneilia Harris, a certified financial planner and author of the book Finance ’n Stilettos. “If you won’t initiate that conversation, you’re hurting yourself. Sharing stories about money is a great way to learn.”
Investing itself, we’re in favor of. (You might have picked up on that, since we’re a company named Ellevest.) Especially investing in low-cost, well-diversified investment portfolios. That’s because — we’ve said it before, and we’ll keep saying it — we really, really need to fix the gender investing gap. Women don’t invest as much as men — we keep 71% of our money in cash (in other words, out of the market). This is part of the reason that we retire with two-thirds the money of men (even though we live longer).
As an alternative, open a savings account with a high annual percentage yield (APY), which means you’ll earn interest based on how much you deposit into your savings account. According to Bankrate.com, a good APY is between 3 and 5 percent. Make sure when that your direct deposit hits, you’re automating your payments into your savings account that way you won’t forget. However, make sure it is not easily accessible to make withdrawals from your savings. If you feel you don’t have the self-control to not withdraw from your savings, here’s a few reasons why you should keep your checking and savings account at different banks, according to LearnVest.
Take on less risk. Women are more likely to have their savings allocated in a more age-based allocation of investments than their male counterparts. In fact, looking specifically at Fidelity retirement savings accounts over the last three years, the percentage of women allocated appropriately for their age has increased by approximately 40 percent. Furthermore, fewer women have their savings fully invested in equities than men (which could represent too much risk and not enough diversification); and women are more likely to invest in target date funds, ensuring they are well diversified.
“We were then left with a chunk of that cash plus some Unilever share options. That’s the point where Jennie really wasn’t interested,” says Mr Byrne. Initially he invested in a low-cost “tracker” fund that simply mirrored the performance of the FTSE 100 index, but after building up his confidence he put money in funds run by professional managers, which have delivered better returns.
Women make roughly 70% of household purchases, putting them in a great position to benefit from the strategy that once made Peter Lynch the best-known mutual fund manager on the planet. Lynch, who ran Fidelity Magellan (symbol FMAGX) from 1977 through 1990, said in his book One Up on Wall Street that investors’ best research tools are their own eyes and ears; he got many of his best investment ideas while walking around shopping malls and talking with his friends and family. In fact, Lynch wrote, his wife was responsible for turning him on to what turned out to be one of his best picks ever, Hanes Co., when she told him how much she liked L’eggs panty hose, which Hanes makes.
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