Do Female Investors Outperform the Male Investors?
According
to Fidelity Investments' 2021 Women and Investment Study, despite many women's
lack of investing confidence, their portfolios beat their male counterparts.
According
to a review of annual performance across 5.2 million accounts from January 2011
to December 2020, women investors earn positive returns on average and
outperform males by 40 basis points, or 0.4 per cent.
Lorna
Kapusta, head of women investors and client engagement at Fidelity, said,
"It illustrates that women are wonderful investors, and when they take
action, it can pay out rather nicely for them."
The
latest findings back with a previous study from the company, which found that
women can outperform males with a buy-and-hold investing strategy rather than
frequent trading, which can stifle performance over time.
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to research, single persons have a poorer financial situation.
The
data demonstrate that women have made progress beyond retirement accounts, with
two-thirds now investing extra savings outside of emergency needs, up 50% since
2018.
With
women's salaries rising, the trend to invest outside of retirement began in
2018, according to Kapusta. The epidemic, on the other hand, may have
accelerated some of these changes.
While
the recession presented many women with unprecedented financial hardships, it
also provided drive.
Since
last summer, there has been a 43 percent year-over-year increase in women
opening new Fidelity investing accounts, as well as a 37 percent increase in
women seeking advice, according to Kapusta.
"All
of these variables, taken together, really laid the groundwork for this type of
critical transformation," she continued.
Furthermore,
the data suggest that 9 out of 10 women are ready to take proactive steps over
the next 12 months, with 62 percent willing to improve their knowledge of
financial planning and investing.
Room
to grow
Despite
the fact that women have progressed, just one-third of them are confident in
their abilities to make economic judgments.
Worse,
many people have too much cash outside of their emergency fund and may be
missing out on growth opportunities.
"We're
still seeing money on the sidelines," said Kapusta.
Indeed,
nearly half of women said they have at least $20,000 in savings on top of their
emergency funds, and a sizable percentage have cash in excess of $50,000 or
$100,000.
Women
want to take a more active role in their finances, but investing myths may be
holding them back. According to the research, 70% of women say they need to
learn more about picking individual stocks.
She
explained, "There's often this self-doubt that comes into play."
"And we have the ability to keep normalizing the money topic."
The
findings from a countrywide poll of 2,400 participants, evenly split between
men and women, were included in Fidelity Investments' 2021 Women and Investing
Study. Investors had to be at least 21 years old, earn $50,000 or more, and
participate in a company retirement plan.