Women Can Level the Playing Field in Investing

Woman drawing on the board

By Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy

Women have unique financial considerations and they face certain realities–they are paid less than men, spend less time in the workforce, spend more time in retirement because they live longer, and often have their financial plans derailed by big life changes. Fortunately, women also have real strengths when it comes to investing and there are things they can do to help level the playing field. 

There are certain basics every investor should know. Whether you’re a woman or a man, the SEC’s Investor.gov website is a great place to find tools and resources on how to invest wisely and avoid fraud.

Addressing the Numbers Game

There are about 157 million women in this country with a nearly 51 percent majority. Even with strength in numbers, however, women are at a disadvantage when it comes to pay. From an investing standpoint, one way to address this issue is to first create a financial plan that takes your financial needs and objectives into account and start investing your money so it can grow exponentially. Get started by checking out the free financial planning tools on Investor.gov.

Don’t Budge on Your Budget

It’s especially important to create a budget. And while most women are comfortable with setting a budget, they tend to be more apprehensive when it comes to investing.

Identify your “must have” expenses, while cutting back on the non-essentials. It’s also critical to pay off credit card and other high-interest debt. You don’t want the hard-earned money you could be saving and investing going toward interest payments since any investment return is likely to be less than the interest you’re paying on debt. Sticking to a budget and following these basic guidelines will put you in a stronger saving position, and may make you feel more comfortable when it comes to investing.

Less Money, More Time

While women may make less than men at the same job, there is something that women have more of, and that’s time. On average, a 65 year old woman is likely to live to about 87 and a man of that same age will live to about 84. No one wants to run out of money in retirement, so make sure you create a financial plan that takes longevity into account. There are all kinds of investment opportunities, so choose a mix of products for your short and long-term goals.

Risky Business

Women and men tend to deal with risk differently. Women tend to buy and hold onto their investments, while research shows that men tend to try to time the market and trade more frequently. In fact, the investing approach used by many women is a good way to plan for the long-term.  Diversification can help reduce overall risk of an investment portfolio. Recognize that investment needs change over time and that while your investment portfolio may include a higher percentage of riskier products earlier in life to get a higher return, you may want to consider a more conservative approach as you near retirement to keep your money safe when you need it. 

Big Life Changes

Women experience many changes in life that can derail financial plans. For example, some women leave the workforce for long periods of time due to family circumstances, such as caring for children or parents, sometimes both at the same time. These kinds of circumstances can affect your 401(k), IRA, or other retirement savings plans in two ways. During the time out of the workforce, you won’t be contributing to a retirement plan, and you won’t benefit from matching funds, if any, from your former employer. 

Divorce or the death of a spouse is another life-altering event. Financially, it could mean less money to care for the family. It could also mean there’s less money for saving and investing. If your spouse was typically in charge of investing, you will have to take over that role as well. It’s vital that you educate yourself now on how to manage your money and invest wisely. You can start by going to Investor.gov. A good, sound financial plan should take into account the family obligations you may incur in the future. It should include both planned events, such as choosing to stay out of the workforce, as well as the unexpected, like losing a job, divorce or the death of spouse. The bottom line is, recognize and plan for all of life’s possible events. The good news is that even if none of these big life events actually happen to you, you’ll be better off with having more money in savings and retirement.

Excuse Me, I Have A Question

Women are great at asking questions. Although with today’s GPS technology, we don’t usually need to stop at a gas station and ask for directions anymore—one thing women did and men didn’t—women generally ask more questions than men in almost any situation. That’s one of the reasons why women are less likely to become victims of investment fraud. However, it’s still important to familiarize yourself with ways to protect your investments. Beware of so-called investment professionals who use high-pressure sales tactics, promise guaranteed returns or claims “too good to be true.” You should also check to see whether the investment professional you’re dealing with is registered by going to Investor.gov. And, keep asking questions.

You’ve Got This

You can level the playing field by understanding your particular situation and making your financial plans accordingly. Most importantly, do your research and have confidence in your decisions.    

And remember, although women and men may have unique considerations when it comes to saving and investing, they do have one thing in common—they can look to Investor.gov for information on how to invest wisely and avoid fraud.


The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This article expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners, or other members of the staff.