Women and investing: How to build financial intelligence

Only a quarter of women in the U.S. invest in the stock market.¹

That said, when women do invest, their portfolios tend to outperform men’s. In fact, studies over the past two decades show that, generally, women make less risky investments, hold investments longer and see higher returns.²

One reason women are less likely to invest than men may be that they see the stock market as too risky. According to U.S. Bank’s 2020 Women and Wealth Insights Study, a majority (72 percent) of women say financial security is a main motivator for building wealth, compared with 59 percent of men.³ They are also more likely to be concerned with their long-term savings, as 43 percent of women fear they won’t have enough saved for retirement, versus 33 percent of men.³

Studies over the past two decades show that, generally, women make less risky investments, see higher returns and hold investments longer.

However, investing can be a vehicle to financial security rather than a risk. Investing has the potential to help you make progress toward your financial goals, whether that’s building a child’s college fund, saving for retirement or growing your overall wealth.

5 ways to invest in your financial intelligence

Here are steps you can take to feel more engaged in your finances and empowered in your investing decisions.

1. Know your financial goals. Whether you’re saving for a vacation, a home or retirement (or all three), knowing what you want to achieve can help you make the most of the money you’re investing.

2. Evaluate your investment approach. Whether from a financial professional or a website, evaluations can provide insights into how you approach money and help you understand things like your investment risk tolerance.

3. Seek out a financial professional. A professional can help you better understand your approach to investing, as well as your options. Be clear when discussing what you want for your future. The more candidly you lay out your goals, the easier it will be for them to help you choose the best investments to generate the financial return you will need.

4. Contribute as much as you can. The answer to when to invest is usually now. When it comes to how much to invest, aim for as much as possible, especially early on, to take advantage of compound interest and time in the market. Maximizing 401(k) contributions is a good way to make investing essentially automatic.

5. Engage with your money. Women are less likely than men to talk about money with friends, use finance-tracking apps and watch money-related TV shows.³ Finding resources and connections that speak to your financial needs can make investing and managing finances less stressful — maybe even fun.