“Don’t you worry your pretty, little head.” It’s an attitude far too many women still (still!) receive when it comes to their investing prowess.
Not only is it wrong morally, it’s wrong on the merits, according to a new study from Capital Group. The home to American Funds finds women investors “are highly engaged in financial decisions, contribute meaningfully to household income and assets, and expect their investments to work hard for them.”
Despite this, 81 percent of women investors say they have personally experienced negative stereotypes regarding finances, including their investing acumen, income, role in making financial decisions and appetite for risk.
“American women are a powerful economic force with $11 trillion of assets,” Heather Lord, senior vice president and head of strategy and innovation at Capital Group, said in a statement. “Women are a complex and varied group of investors, and they have a clear vision for their investing goals. They want enough money to retire and to take care of children or aging family members. They want investments that outpace the market over time and show resilience in market downturns.”
More than half of the women surveyed rate themselves as meaningful contributors to their household income and assets, and 52 percent say they are always or usually confident they have the knowledge to make good financial and investment decisions.
Half of Baby Boomer and Generation X women investors say their top priority is to beat the stock market over time, while for 51 percent of Millennial women, it’s to grow their investments in line with the market.
As a group, women believe they have more economic power as investors than in the workplace: nearly half say that women have a great deal of economic power as investors, while only 35 percent believe they have as much power in relation to wages in the workplace.
Women Have High Expectations for Financial Performance
Nine out of 10 women and men want the companies they invest in to deliver strong financial performance in terms of revenues, earnings and dividends per share growth.
By a margin of nine percentage points over men, women investors think it’s important for companies they invest in to focus on growing U.S. jobs, operations and exports.
Women are also somewhat more likely than men to invest in companies that support new technologies and innovation-led growth. They expect companies to promote health and wellness of consumers; help disadvantaged communities; and promote economic opportunity for women, minorities and LGBT persons by approximately 15 percentage points more than men.
Women are also 22 percentage points more likely than men to emphasize the importance of investing in companies that put women in senior management and board roles.
Women Investors Are Comfortable Taking Risks
One of the most common stereotypes women investors face is a low appetite for appropriate investment risk, but their investment preferences suggest otherwise. When asked about the investment approach that best aligns with their retirement savings objectives, only one out of 10 women chose the most conservative option: bank CDs and high-quality bonds with little or no money invested in the stock market.
In contrast, the top choice overall for about one in three women and men was a mutual fund with a track record of outpacing the stock market over the long term. However, women investors do not ignore the concern for market downturns.
Nearly one in four women (24 percent) investors surveyed voiced their highest preference for mutual funds that do better than the stock market during downturns, compared to 19 percent of men, indicating a somewhat higher interest in downside protection on the part of women.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
