When it comes to investing success, women did better than men last year.
Female investors earned higher returnsÂ and saved more of their pay to fund retirement accounts than men, even though most womenÂ didn’t think they would, according to a recently releasedÂ Women and Money SurveyÂ from Fidelity Investments.
The investment gains ofÂ womenÂ topped theirÂ male counterpartsÂ by 0.4% last year, according to an analysis of more than eight million client accounts at Fidelity. Similarly, an analysis of 14 million employerÂ retirement accounts that are serviced by Fidelity found that women saved 9% of their paychecks in 2016, while men set aside 8.6%Â for their golden years.
While those differences might not seem like much, the combination of better returns and higher savingsÂ can add up to bigger account balances in the future. For example, aÂ womanÂ with a $75,000 salary who starts to invest at age 30 and saves 9% each year and earns a 6.4% annual return would have a portfolio worth nearly $200,000 more at age 67 than a man who saves 8.6% with an annual return of 6%, according to the Fidelity survey.
The ironyÂ is that when the nearly 1,500 women polled from Dec. 1 – 11Â were asked who they thought would earn a bigger return in 2016Â âÂ men or women âÂ only 9% of the female respondentsÂ thought they would do better, the Fidelity study found.
The results of Fidelity’s analysis underscoreÂ the view thatÂ women are underestimating their strengths as investors. And that realization could go a long way towardÂ getting more of themÂ actively involved in managing their own money, says Kathleen Murphy, president of personal investing at Fidelity.
“We’re trying to pierce the ‘confidence gap’ in their minds,” Murphy tells USA TODAY.
The reason? Investing is a skill they must master. “Ninety percent of women,” she says, “will at some point in their lives be the sole decision-maker in financial matters, due to divorce, death and other circumstances.”
Nearly nine of 10 women surveyed say “more financial education” would provide them with “greater confidence” in managing their finances.
So what characteristics helped Fidelity’s female clientsÂ post better returns than men?
* Plan with purpose: Women think more “holistically” about their investments, and build theirÂ financial plans around life goals rather than trying to beat the market.
* Take less risk: They also benefit from making fewer risky bets, such as putting 100% of their money in stocks, which tend to suffer larger price swings and bigger losses in turbulent markets than fixed-income assets like bonds. Women also pick investments that are appropriate for their age and time horizon.
* Practice patience. Women place fewer trades, according to Fidelity, and tend to carry out a long-term, buy-and-hold strategy. Men are 35% more likely to make trades than women, Fidelity’s client data analysis found.
“The good news is many women are taking positive steps to save and invest effectively for the future,” Murphy says. “But there are still many who need to do more. Taking the next step to ensure that savings are invested properly and generating growth is critical to helping women progress toward their financial goals and live the lives they deserve.”
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