Men and women have different investment priorities – Twin Cities

Are women and men financially different? What drives women’s financial decision-making? How do they balance saving, spending and planning for the future?

Historically, much of the academic literature on gender differences has focused on levels of confidence in women. The data suggests that women are less confident about their money and men are “moving on.”

This dynamic has been heard over the last 20 years. For one thing, women today control a greater percentage of household wealth, with more than her $10 trillion in U.S. household financial assets, or about one-third of all. I’m here. Furthermore, according to consumer research firm Hearts and Wallets, 9 out of 10 women who are married or living with a partner say they are involved in spending and investment decisions. , up from 42% for her in 2012.

Even more staggering, women are expected to inherit 70% of America’s $41 trillion in intergenerational wealth over the next eight years. This is because men marry younger women who tend to live longer. In addition:

• By 2030, women will own nearly two-thirds of US personal wealth.

• The majority of university and professional degrees are now earned by women.

• More women than ever before are in the workforce and a significant number own their own businesses.

The impact on social norms and expectations of this level of wealth redistribution could be severe in the years and decades to come. Still, the gender pay gap has narrowed, but it continues. In 2020, a woman was earning her 83 cents for every dollar her man earned. As a result, are there discernible differences in how women view their finances? Should women rethink their traditional roles when it comes to household finances and planning?

Differences between women and men when it comes to investing

It’s partly genetic, partly learned, but women approach money differently than men. Traditionally, men have assumed the role of provider and women assumed the role of nurturer, but these roles have changed dramatically (and many say for the better). . Women are taking a more active role as key decision makers when it comes to household decisions and investments.

This can be attributed to the industry as a whole moving away from inventory picking and performance to more long-term holistic planning and education. This matches the mindset of most women.

Women are statistically better investors than men. A 2021 Fidelity Investments study found that, based on an analysis of her 5.2 million accounts from January 2011 to her December 2020, women outperformed men on average by 40 basis points (0.40%) annually. ) achieved higher positive returns.

why is this? At the risk of painting the world with too broad a brush, women tend to be more conservative, buy-and-hold investors, while men trade more often. We have seen first-hand that women (generally) research investment ideas more than men, and that women routinely accept advice from investment professionals more than men (also It’s common). Men often act on instincts or tips from friends.

The pandemic has triggered women to be more proactive about investing. According to Fidelity, two-thirds of women now invest outside of their emergency or retirement accounts. At Wealth Enhancement Group, we are seeing more women seeking guidance and education in financial planning, especially given the market upheaval she has experienced since March 2020.

Finally, many women tend to want their resources aligned with their values. Studies with wealthy women tend to play a more prominent role for social causes than for men. For example, 95% of women ranked “helping others” and 90% reported that “environmental responsibility” was important to them. 62% of women say social causes are more important than accumulating wealth, while 53% of men say that as women accumulate more assets, they put more capital into charity. It suggests that it may be redirected to donations and social projects. In recent years, this has also spawned impact investing, with environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) themes shifting into investor portfolios.

I have work to do

That said, many women continue to say they lack confidence in their investment decisions and fear being the sole decision maker in their household. They tend to worry about being left alone to make certain decisions. Many women are sidelined by misconceptions about investing. Too many people have large amounts of cash in their emergency fund.

need to plan

Regardless of their financial situation, women should create a comprehensive financial plan that considers their beliefs, values ​​and goals. To create a plan, you should ponder the following questions.

• What is important to you and how can you align your values ​​with your money?

• How will you generate a sustainable income for retirement?

• How do you plan for your tax liability?

• What would you like to leave behind for your successor or what cause do you believe in?

A financial advisor can help you develop a plan that covers all these points.