Women, especially younger ones, are taking investing seriously
10/03/2024 16:04
Women are embracing investing outside of retirement accounts, especially younger women, but the fear of making mistakes still lingers.
Women have flocked to the investment party, particularly younger ones, but that doesn’t mean they are on top of the world about it.
That’s the takeaway from two new reports.
While 7 in 10 women now invest in the stock market outside their employer-provided retirement accounts, according to a new report from Fidelity Investments, “women are nearly two times more likely than men to describe their level of investing knowledge as ‘nonexistent,’” Lorna Kapusta, head of women and engagement at Fidelity, told Yahoo Finance.
They are also more likely than men to feel overwhelmed and intimidated by investing and managing their day-to-day finances and less likely to see themselves as investors, she said. Just 64% of women who invest consider themselves an investor, compared to 76% of men who invest.
And disturbingly, more than half of those surveyed said that their financial situation keeps them up at night at least monthly — those numbers are higher for Gen Z (72%) and millennial women (68%).
“The financial industry historically has made investing seem more complex than it needs to be with unnecessary jargon,” Kapusta said. “So it’s not surprising that most women say investing intimidates them."
Fidelity’s report found that Gen Z women, those in their 20s, are nearly two times more likely than Gen X women, who are in their 40s and 50s, to invest outside of retirement.
And they aren’t tiptoeing into it. Overall, women who invest outside of retirement carve out 9.5% of their paychecks to do so. Among Gen Z women, that level is 10.4%.
That can add up to a lot of cabbage.
Gen X and boomer women are working it, though. While younger generations continue to invest in higher numbers, the percentage of Gen X and boomer women who invest in the stock market jumped the most year over year, increasing 18% and 23%, respectively.
That’s all good news, but here’s what makes Kapusta hopeful for the younger generation of women.
Two-thirds of boomer women started investing in their 50s or later in life, the survey found. But most younger women began investing in their 20s.
“This is incredible to see,” Kapusta said.
What can help move the needle even more?
“I’d love to see that number of women owning investments in the stock market continue to get higher,” Kapusta said. “Most women want to invest, but so many aren’t sure where to start, which is why financial education is so important.”
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Gen X women fall short on financial swagger
A new survey by Northwestern Mutual is a mixed bag when it comes to women investors and retirement savers.
Six in 10 Gen Z women think they will be financially prepared to retire when the time comes, while just 40% of Gen X women think they will get there.
“Financial confidence varies significantly across generations — with anxiety peaking among Gen X women who can see their own retirement on the horizon,” Andrea K. Williams, a Chicago-based wealth management adviser at Northwestern Mutual, told Yahoo Finance.
Gen Z women are intoxicatingly optimistic. They plan to retire nine years sooner than boomer women (by age 62 vs. 71) and expect to pay off their college loans a full decade earlier than millennial women (by age 33 vs. 43).
Gen X women are the gloomiest. That could be because they have $95,000 on average saved for retirement and they believe they will need more than $2 million to retire comfortably, more than any other generation of women.
Perhaps unsurprisingly, given the gap between their current reality and expectations, about 4 in 10 Gen X women described themselves as financially insecure.
Even with their optimism, roughly 8 in 10 Gen Z (79%) and millennial women (76%) said their financial plan needs improvement.
“Life is busy, and sometimes the best thing we can do is pause, think about what we want in life, build a plan, and then get back to living,” Williams said. “Many women who I work with don’t feel like they have the time or expertise to build a thoughtful financial plan that will work for them.”
The main thing to remember is that you don’t have to do financial planning on your own. “There are professionals who can help them to unpack their messy financial life, organize it, and get them on the path to financial security,” she said.
So true.
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.
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