Wall Street banks may be dominated by men (for now). But when it comes to investing, women are more than pulling their weight.
According to a study conducted by Fidelity, female investors outperformed men by 0.4% in 2016. And Fidelity isn’t the only company that picked up on this trend: The investment tracking app Openfolio also found that women outperformed men in the investment realm over the last three years.
Why are women better with their investment dollars, according to Fidelity's analysis? Taking family factors like paying for their child’s education into account, women tend to take more of a long view, putting their savings to work in retirement accounts and low-fee index funds more often than their male counterparts. Men, on the other hand, are more likely to try to “outsmart the market,” which can be detrimental to their long-term savings.
"Women are doing better than men and with a lot less risk," Kathleen Murphy, president of personal investing at Fidelity, explained.
The only caveat is women are typically more afraid of investing at all, feeling like they don’t know enough to make smart investments. As a result, they ask men to take control of their finances, or they let their savings sit in accounts that don’t collect any interest.
But we had a hunch that the 20-something women of 2017 may be working harder to educate themselves. So we decided to ask seven real women in the 20-29 age bracket exactly where they are investing and if they are investing at all.
Melissa, 27, San Francisco, CA
“I used to have money in Wealthfront, but I recently took it out to pay for a trip. I hope to start contributing to again at some point—maybe once I’ve paid off my student loans. I currently I have a small amount of savings sitting in my account, and I opted into my employee stock purchase plan, so I have a little bit of money there. I wish I had more money saved in general. It would be nice to feel more financially secure and eventually have enough money for a down payment on a house.”
Julia, 26, Washington, D.C.
“I’m in grad school, so I don’t really have savings, but I do have a mutual fund that my parents manage that has my inheritance in it. I also have a small 401k from work before I went back to school. I haven’t invested in anything because I feel super overwhelmed. Like I just don’t know enough about it. I sometimes worry about not being able to give my kids as much financial support as I’ve gotten, but I hope I start to feel differently once I finish school.”
Maya, 28, New York, NY
“I have savings in Wealthfront, Vanguard, and Ally Bank. I have general investments in my personal account, Roth IRA, traditional IRA, and 401k. I want to retire comfortably and at a reasonable age, so that’s a top priority. One thing I’m concerned about is how long it will take me to be able to use the money I’ve put away. I hope I’m striking the right balance of saving enough to be comfortable in the future without limiting myself from enjoying life before I have major responsibilities like a mortgage and a family.”
Bee, 27, San Francisco, CA
“I have a Betterment “Build Wealth” fund and a 401k. I max it out because I have a really generous match, and I want to focus on building my retirement fund while I'm young so I can have more flexibility when I’m older and have more expenses like kids. I set up a Betterment account because I had so much money in my Wells Fargo savings account, and it wasn’t collecting interest. I want to be able to buy a house in the Bay Area one day, so I want to make the most out of the money I have now.”
Emily, 25, Chapel Hill, North Carolina
“I’m a PhD student. So whatever money I can spare on my PhD student salary, I put into my Vanguard Roth IRA and my Ellevest investment account each month. I have both of them automatically take out $50 per month. I set up these accounts so that I can start good investing practices early and I see a rate of return of about 9% in both. I also have a 30-year mortgage on my condo and plan to use the money from the sale (once I finish grad school next spring) to cover my moving expenses and relocation. I am under the impression that “playing the market” is futile, at least for me. I look forward to a time in the not-so-distant future when I have a little more money to invest!”
Caroline, 24, Portland, OR
“Honestly? I’m $80,000 in student debt. I got my teaching credential right after college, which I think was probably a mistake. I don’t have anything invested because I live month-to-month right now, and put anything extra toward my loans. I hope that changes someday, but it’s really hard to imagine.”
Lily, 29, Brooklyn, NY
“I have a decent chunk of money with Fidelity—ETFs, a rollover IRA from an old job, and a Roth IRA. I also have a CD with Vanguard, and I contribute 17 percent of my paycheck to my company 401K. We don’t have a match (I work for a startup), but I still think it’s important, and it helps me put money away without thinking about it. I also have an emergency fund in my bank’s savings account, but I’d like to have a little bit more in there in case something goes wrong. I wasn’t always so responsible with my finances, but in my late 20s when I finally started making enough money to save, I got serious about it. I know it will help me in the long run!”