Women and Their Comfort Level With Investing

Women and Their Comfort Level with Investing
May 2, 2018
Kathleen T. Owens, Financial Adviser, Fiduciary

A recent survey of 12,000 people conducted by The Federal Reserve, revealed that women rate themselves lower than men in their comfort level with managing their self-directed investment accounts. A self-directed investment account is one that you manage yourself. It can be your 401(k)-account offered through your employer, or your IRA (Individual retirement account).

Why is there a disparity between how men and women view their comfort level?
Could it be that women are cautious and careful, whereas men may overrate their ability?
There is certainly a societal bias against women and their abilities in math and investing. Women may assume that they “just aren’t good at math”, and thus, not good at investing. This isn’t true. Investing isn’t just about math. It’s about understanding how different investments work, and really understanding how early planning and early saving are critical to a successful investment portfolio.
This perception is changing due to women having more opportunities to pursue careers that require strong math and finance abilities.


Comfort investing self-directed retirement savings (by gender and education, respondents not currently retired)

Gender                     Education                                                   Very Comfortable                       Mostly Comfortable

Male                          Some college or associate degree                      20%                                                 34%

Male                          Bachelor’s degree or more                                   26%                                                 38%

Female                     High School degree or less                                     9%                                                 28%

Female                     Some college or associate degree                       11%                                                 25%

Female                     Bachelor’s degree or more                                     9%                                                  29%


Source: Report on the Economic Well-Being of U.S. Households in 2016-May 2017. Board of Governors of The Federal Reserve

If you feel you are not confident in your abilities with financial matters, it is very helpful going forward to find out where these feelings may be coming from. There are things you can do to change these feelings. Working with a financial adviser is a very good idea if you want to do a better job with your finances and investments. An experienced financial adviser can walk you through the planning process, educate you along the way, which will hopefully address the reasons why you may be getting “stuck”. Then, finding solutions to work-through these mental roadblocks.

By having an organized decision-making process can do wonders to alleviate the common roadblocks we can all feel when faced with making important decisions. The things that can get us stuck are:
Inexperience, too many choices, fear of making the wrong choice, and fear of the unknown.

The Decision-Making Process
Making important decisions is difficult and when you are making decisions about a topic in which you have limited experience with, the decision can be come even harder to make. It is normal to feel this way. Through education and working through the decision-making process with a financial adviser makes the process easier. I work with my clients by educating and demonstration outcomes with real-life examples. When the investment process can be broken-down into steps, decisions become clearer and easier to make.

Number of Choices
Anyone can be overwhelmed by the number of investment choices. There are about 9,300 U.S. Mutual Funds and about 4,700 Exchange Traded Funds worldwide. That’s a lot of choices! When investing is approached through an organized process with a financial adviser, the selections come into focus, and the process becomes much easier. The choices are narrowed-down into the ones that align with your investment goals and attitude towards certain investments. Having criteria based on your views and experience with investing moves you towards the right investment choices for you. Working with an investment professional creates confidence and clarity with your investment plan!

Determining your Choices and Moving Forward with Your Plan
Through a number of conversations with your adviser, your investment portfolio takes shape. You are as involved in the decision-making process as much as you want to be so that you feel comfortable and confident moving forward. You know what you are investing in and your investments are then purchased for your portfolio.

Monitoring and Feedback on Your Portfolio
Your investment portfolio is monitored and reports on the performance is prepared for you each quarter or bi-annually to keep you informed about how your investments are tracking with your goals. Being informed and having performance reports keeps you informed and educates you on your investments. Having knowledge and feedback helps you feel in-charge of your portfolio.

Having a professional partner working with you to create structure for your financial life is empowering. It’s one very good way to reduce the financial stress in your life. The American Psychological Association reports that 72% of adults report feeling stressed about money at least some of the time. 22% rate their stress level as extreme. Begin by developing a plan with the help of a professional: a licensed financial adviser. It will be money well-spent.
A 2011 study by HSCB Bank, The Future of Retirement, showed that those with financial plans accumulated nearly 250% more retirement savings than those without a financial plan in place. Also, 44% of those who have a financial plan in place, save more money each year for retirement. Another study by Morningstar researchers, David Blanchett and Paul Kaplan showed how valuable the advice from financial planners can be. Their research showed that financial planners help their clients generate about 1.82% additional return each year, thus resulting in approximately 29% more in retirement wealth. One should not be overly concerned with a financial planner’s fees. Even if a planner’s fee is 1% annually, the benefit received by the financial planning client far exceeds the expense.

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