Female investors underestimate themselves.
Just 9% of women participating in a Fidelity Investments study believed that they had outperformed men during the past year.
The evidence suggests otherwise.
Fidelity reported that growing body of research, including an analysis of the investing behavior of more than 8 million Fidelity retail customers in 2016, showed that women tended to outperform men in generating a return on their investments.
Fidelity said it was concerning that so many women doubted their money management capabilities. Asked what financial life skills they wished they had learned earlier, the number one answer was “how to invest and make the most of my money.”
Research findings indicate that women have learned far more than they realize.
For one thing, Fidelity’s client data analysis showed that when it comes to investing, women on average performed better than men by 40 basis points last year. A small difference, perhaps, but potentially significant over time, Fidelity said.
The analysis also found that women came out on top in a comparison of annual savings rates.
Women consistently saved a higher percentage of their paychecks in workplace retirement accounts than their male counterparts at every salary level: an annual average of 9%, compared with an average of 8.6% by men.
As for accounts outside other than workplace savings, such as IRAs and brokerage, the data showed that women added an average of 12.4% to their account balance, compared with 11.6% for men.
Fidelity said that during the past three years, it had seen the number of women investing their money with the firm grow by 19%, to more than 12 million.
“The good news is many women are putting themselves in the financial driver’s seat, taking positive steps to save and invest effectively for their future,” Fidelity’s president of personal investing, Kathleen Murphy, said in a statement. “But there are still many who need to do more.”
Murphy said saving alone does not keep pace with inflation; by not investing, one is likely losing money. “Taking the next step to ensure that savings are invested properly and generating growth is critical to helping women progress toward their financial goals and live the lives they deserve.”
Orc International, a research firm, conducted an online omnibus survey in early December among 2,995 U.S. adults: 1,496 men and 1,499 women. In early January, it surveyed 514 men and 511 women, 18 years and older, who indicated they had some type of investment account.
Women’s Skills and Strengths
Fidelity’s customer analysis showed that certain characteristics sometimes viewed as being inherently feminine may be helping women experience strong returns on their investments.
Women often build financial plans in terms of life goals for themselves or their families, rather than focusing solely on performance. They tend to buy and hold stocks, rather than react quickly to market fluctuations.
Women’s savings are likelier than those of male counterparts’ to be allocated in a more age-based allocation of investments. Fidelity analysis of retirement savings accounts over the last three years showed that the number of women who allocated appropriately for their age had increased by some 40%.