Why 50% of Women Aren’t Investing Their Money

Investing is an essential part of a good financial plan because it allows you to gain earnings on the money you have saved. There are a number of investment vehicles available with varying levels of risks and potential rewards: banking products, stocks and bonds, investment funds, cryptocurrency and real estate. However, many women are not actively investing in any of these products, a new GOBankingRates survey found.

GOBankingRates asked 5,000 Americans about their investing habits, and 50 percent of women said they are not currently investing their money — which means that they might be missing out on potential opportunities to compound their wealth.

Click through to find out why women aren’t investing, and learn more about Americans’ investing habits.

The gender wage gap could be a big reason why women don’t invest. According to the latest data from the Bureau of Labor Statistics, women who were full-time wage and salary workers had median usual weekly earnings that were 82 percent of those of male full-time wage and salary workers. This means that women as a whole have less discretionary income than men to invest.

Given that women, on average, make less money could explain why women who do invest are investing less of their money than men. Most women (35 percent) said they have only invested $500 or less over the course of their lifetime. Meanwhile, most men (28 percent) invested $10,000 to $49,999.

Learning about investing, making investments, monitoring investments and adjusting investments as needed are all things that take time — and time is a resource women tend to have less of.

Women are often relegated to a caretaker role — even if they work full-time jobs — and spend more of their spare time doing housework and taking care of children than men. According to Pew Research data, women spend an average of 15 hours per week doing housework, while men spend an average of nine hours per week. And, women spend an average of five to six hours per week taking care of children, while men spend an average of two hours per week.

Another thing that could be holding women back from investing is their own self-perception of their experience levels. Only 42 percent of women said they have a high level of investing experience vs. 60 percent of men, according to a Wells Fargo Investment Institute survey.

“This perceived lack of experience has consequences — more women than men are fearful of a market downturn, women tend to expect lower returns on their investments, and women are more likely to say that they are afraid to take investment risks,” said the survey analysis.

Although women think they will be less successful investors, this doesn’t mean that they actually are less successful. The GOBankingRates survey asked both men and women to rate their investment success on a scale of one to five, with five being the best. And men and women have similar levels of self-reported success — the average success rating among men was 2.9, and the average success rating among women was 2.8.

Overall, 34 percent of men and 27 percent of women say their investments have been successful or very successful.

The majority of women invest in less-risk, less-reward products: 23 percent of women invest in banking products (savings accounts, checking accounts, money markets). The next most popular investments among women are stocks and bonds (22 percent), and mutual funds and ETFs (22 percent).

Meanwhile, most men invest in stocks and bonds (27 percent), followed by investment funds (25 percent) and banking products (24 percent).

Only 18 percent of the women surveyed said they invest in real estate, which — according to our survey — is the most lucrative investment vehicle. On a success scale of one to five, 41 percent of all survey participants who invested in real estate rated their success as a four, and 17 percent rated their success as a five. By not investing in real estate, women are missing out on a major vehicle to grow their wealth.

Fifty-seven percent of women who do invest said they are investing to save for retirement. This is also men’s top goal, with 61 percent saying they are investing as a form of building retirement savings.

Other financial goals were not nearly as big of an investing priority for women: 17 percent said they are saving for an emergency, 13 percent said they are saving for college (for themselves or someone else), 7 percent said they are saving for a large purchase and 6 percent said they are saving for a special event or trip.

One thing female and male investors have in common is the frequency with which they check their investments’ performance: 37 percent of women and 33 percent of men said they check their investments monthly, which was the most popular response among both genders.

Click through to read more about how Warren Buffett’s best strategies prove why women make good investors.

More on Investing

• 9 Fastest-Growing Industries to Invest in This Year
• How to Invest in the S&P 500
• Why You Could Be Your Own Biggest Financial Obstacle

Methodology: The GOBankingRates survey posed six questions to 5,000 respondents: 1) Are you currently investing your money? Please note that respondents were not asked to consider/not consider retirement accounts when answering this question 2) Where are you investing your money? 3) Which of the following reasons most closely matches your investing goals? 4) How often do you check your investments’ performance? 5) To your best estimate, how much of your money have you invested over your lifetime? 6) How successful have your investments been?Responses were collected by a survey conducted July 2 to 6, 2018, using Survata. Survata categorizes the ages of their respondents in the following groups: 1) 13 to 17, 2) 18 to 24, 3) 25 to 34, 4) 35 to 44, 5) 45 to 54, 6) 55 to 64, 7) 65 and over.