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What women investors are doing right

They save more, take on less risk, and focus on the long term, even in turbulent times.

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Women generally earn lower salaries, live longer than men, and may take time off from the workforce, which can interfere with their ability to save effectively. And on top of that, as many as nine out of 10 women will be solely responsible for their finances at some point in their lives, according to the National Center for Women and Retirement Research.1 But that’s not stopping them. As it turns out, there is a lot that women are doing "right."

Women bring many skills to several aspects of their daily and financial lives:

  • Many women are responsible for the majority of household financial decisions, serving as the chief financial officer of their households.2 Women are also more comfortable discussing finances with their adult children, often acting as the "go to" person for financial questions in a family.3
  • Women are a formidable financial presence in this country, owning 8.3 million businesses and generating nearly $1.3 trillion in revenue.4 They fuel the economy by making more than 85% of consumer purchases and influencing more than 95% of total goods and services.5 The Federal Reserve estimates that women will control two-thirds of the nation’s wealth by 2020.6
  • Women juggle multiple priorities with work and family, and have natural instincts for planning. They research things thoroughly and ask questions. This could be why fewer women than men regret financial decisions; 43% of women say they haven’t made any financial mistakes versus 33% of men.3

What men can learn from women

When it comes to retirement saving and investing, men can, in fact, learn from women. In many cases, old stereotypes about women and money are dissolving into a clearer picture of capability and strength. Our research demonstrates that women tend to:

1. Stay the course during turbulent times.

  • Studies show that while men tend to overestimate their financial competence, women seek information and advice and are more likely to work with a paid financial adviser than men (53% versus 44%).7,8
  • Women tend to be planners by nature. They tend to "stay the course" during turbulent market times, keeping in mind their long-term goals and not trying to "beat the market."
  • Overall, research indicates that women are more focused on comprehensive financial planning, while men tend to focus on investment returns.8

2. Save more of their income.

  • While women typically earn two-thirds of what men do, and their retirement balances are smaller on average ($63,700 versus $95,800 for men),9 when adjusted for their compensation differences, women actually save more of their income. Total employee deferral levels for women are 8.3% versus 7.9% for men.9 This, combined with the average employer match of 4.4% gives women a total savings rate of almost 13%, versus 12% for men.9
  • Women are more likely to take advantage of the catch-up savings opportunity once they hit age 50 (23% of eligible women make catch-up contributions versus 21% of men).9 Catch-up contributions are a good opportunity for older women to fill a gap that may have been created during time off from the workplace.

3. Take on less risk.

For anyone, the goal is to achieve the highest return while taking on the lowest amount of risk—and women are clearly using this strategy.

  • Women hold more balanced portfolios than men, which is beneficial during times of extreme market volatility (with only 8% of women holding 100% of their assets in stocks versus 11% of men).9
  • And, women have higher allocations in blended assets with 27% of their portfolio invested in blended assets versus 22% for men.9
  • Fidelity analysis reveals that women are invested more age appropriately than men (34% of women invested in line with their age-based target date fund versus 28% of men).9
  • Fidelity data indicates that this balanced approach to investing actually helps their bottom line. Women achieve the same or an even better rate of return (by 1% or 2%) than men while taking on less risky portfolios.9

Where women may need help: confidence

It is estimated that women control 51% of wealth in the United States today, and are projected to control two-thirds by 2020. Given this shift, it’s crucial that women feel empowered and confident when it comes to making investing decisions. The Employee Benefit Research Institute (EBRI) has reported that men are significantly more likely than women to feel very confident about having enough money to live comfortably throughout their retirement years and having enough money to take care of basic expenses.

At the beginning of the financial crisis in 2008, seven out of 10 (71%) women felt scared or confused where only 58% of men had the same feelings. Now, five years after the crisis, the good news is that more women feel confident, but the number of men that are confident (65%) still out weights the percentage of women (57%) that feel confident and prepared.

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1. National Center for Women and Retirement Research.
2. The Working Mother and Chase SlateSM Life of a Working Mother: Career, Family and Finances Survey, 2013
3. The Fidelity Personal Economy Intra-Family Finance Generational study was conducted online among U.S. parents and their adult children by GfK Public Affairs and Corporate Communication using GfK’s KnowledgePanel® during the period of July 24 – August 29, 2012.
4. State of Women-Owned Businesses Report, 2012.
5. Inc.com and Competitive Edge Magazine.
6. Federal Reserve.
7. Spectrem Group, Wealthy Women Investors, 2011.
8. Fidelity Investments, Millionaire Outlook: Women & Wealth – November 2012.
9. Fidelity Investments, based on Fidelity analysis of 20,600 corporate defined contribution plans (including adviser-sold defined contribution plans) and 12.3 million participants, as of March 31, 2013.
Diversification/asset allocation does not ensure a profit or guarantee against a loss.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Fidelity does not provide legal or tax advice, and the information provided above is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific legal or tax situation.
Guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions.
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