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Straight talk about women and investing

Women live longer but earn less and invest less than men—making it even more important for women to prepare for their financial future

Key takeaways:

  • Women have investment needs that differ from those of men.
  • It’s important for women to understand the various investment options available, and to know how the investment mix should change over time.
  • Early investment is beneficial for everyone, but especially so for women, who need more money during retirement because of their longer lifespan and lower overall earnings.


There are many things to consider when investing—your age, your risk tolerance, your objectives…but what about your gender? While many of the golden rules of investing apply to everyone, female investors have some unique needs that should be considered.

Here’s what everyone—both men and women—should know about women and investing.


The dilemma: women earn less, live longer, and invest less than men

The numbers tell a clear story of why women need to approach investing differently from their male colleagues. Women live longer, earn less, and usually receive less in Social Security and private pension payments.


Consider the numbers1, 2

  • According to 2020 data from the Bureau of Labor Statistics, for every $1.00 earned by a male, a female earns just $0.82.
  • Women typically live longer. Those who reached age 65 in 2019 were expected to live an additional 21.5 years, compared with just 18.9 years for men. This means they live more years in retirement and have a higher chance of depleting their retirement savings.
  • Median annual earnings in 2019 for women were $45,000 compared with $54,000 for men, which results in lower overall contributions to Social Security over their lifetime.
  • In 2019, the average annual Social Security income was $13,505 for women versus $17,374 for men.

Of course, it’s more complicated than just the difference in lifespan and wages. Women are more likely than men to take a career break to raise children or care for aging parents. Women typically work more part-time jobs which often translate to fewer benefits, such as 401(k) retirement programs with employer matching funds. Women also tend to change jobs more frequently, which limits access to vested retirement programs.

Because of these factors, women should prepare more for retirement, but the data shows that they save and invest less than men. According to a 2022 Financial Wellness survey,3 only 63% of women are saving for retirement, compared with 80% of men.


Good reasons for women to invest early: inflation and compound interest

To help investments keep pace with inflation, it’s recommended that women begin investing as soon as possible. Here’s why.

Investment returns compound over time. This means there is an exponential increase in the value of your investments. As an investment portfolio earns interest and dividends, these earnings are added back to the portfolio, helping it grow even more over time, and helping it stay ahead of inflation.

Compounding is time-dependent—the sooner you invest, the more time your money will have to earn interest and dividends, and then those dividends and interest can earn more interest.

When it comes to investing, time is your friend, and sooner really is better.


Understanding investment options

Many women are new to investing, so here’s an overview of the various investment choices. Each has different levels of risk and potential return.



Also called equities, these make you part owner of the company in whose stock you’ve invested; you become a shareholder. As the company grows and earns money, its stock becomes more valuable; it can even multiply in a stock split. Companies can also share part of their profits with shareholders in the form of dividends. Stocks generally have high volatility in price and return; you can earn and lose money with stocks.



Also referred to as fixed-income investments, bonds are issued by governments, agencies, or corporations as long-term IOUs. As a bond investor, you earn interest paid by the entity that issued the bond. Bonds usually have less risk but offer lower return potential than stocks.


Money market instruments

Also known as cash investments, this debt security returns a fixed interest over a specific timeframe. Like bonds, money markets are also issued by governments, agencies, corporations, or other entities. Interest rates paid typically mirror short-term interest rates. This low-risk investment has an equally low rate of return.



Mutual funds

These usually consist of groups of stocks, bonds, and money markets, combined in a pooled investment. The return on a mutual fund investment is determined by the aggregated return of the individual stocks and bonds that make up the fund. A mutual fund allows you to diversify your investment across different companies and market segments by investing in just one fund. Mutual funds are managed by professional investment managers.



Did you know insurance companies offer investments? An annuity takes the money you’ve invested and converts it to regular payments that you can receive over time during retirement. There are several different types: fixed annuities offer tax-deferred growth of your principal with a regular income stream. Index annuities tie your interest to a market index, and income annuities offer a guaranteed income stream for life. Because they are complicated, annuities are professionally managed.


Balance your comfort level between risk and reward

Markets can be volatile, and every investment has some level of risk; stocks are riskier than bonds or money market funds. But the potential return for an investment is directly related to its relative risk. Riskier investments hold the potential for higher returns.

How much risk are you willing to take for a return? The key is to find your sweet spot.

Your personal risk tolerance—your ability to stick with a strategic investment plan no matter how much the market fluctuates—is key to your ability to earn more than those who panic and sell an investment when the market swings all over the place.

Your time horizon—that is, the amount of time you have before you need to begin selling your investments during retirement—is also key. If you have a lot of time before you plan to retire, you can afford to invest in securities that carry more risk, like stocks. This way, if the market swings down, you still have time for it to correct and swing back up again before you need to sell the investment. If you plan to retire in just a few years, you may be better off investing in securities that carry less risk, like bonds or money market funds.


Planning a portfolio for life

While it might be tempting to be a ‘set it and forget it’ type of investor, there’s a lot to be said for making strategic changes to your investment portfolio over time. This is called rebalancing, which means you shift your investments from riskier to less risky investments as you get closer to retirement.

For example, when you’re young and early in your career, your investment portfolio should include a higher percentage of stocks. Your goal here is to invest for growth using a more aggressive approach. Doing so also allows you to maximize the value of the compounding function discussed earlier. As you move closer to retirement, you should rebalance your investment portfolio along the way to shift from stocks to bonds and money market securities, taking a more conservative approach that’s oriented towards investing for an anticipated income stream.

The mix of stocks, bonds, and other investments you have in your portfolio is called asset allocation. When you have more stocks than bonds in the mix, your gains and losses will have much bigger swings than if you have more bonds than stocks. If your portfolio has more bonds, you may not have big returns, but your losses could also likely be smaller as well.

If you’re nearing retirement, you can’t afford to take a big loss in the value of your portfolio caused by a big market swing, which is why you want to adjust your asset allocation to a more conservative approach.


Take charge of your future and prioritize financial freedom

While our goal here is to help women better understand their investment options, we understand that investing is a complicated topic. We also know it’s not just about the numbers—we know you want to see the big picture and understand the investment process.

We're here for you. We appreciate the unique challenges that female investors face, but we also know how to translate these challenges into a strategic, customized investment plan.

Let’s have a conversation. Schedule a complimentary, no-obligation consultation with Global Retirement and Investment Services today.

And remember that one of the keys to successful investing is to start as soon as you can.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

Stock investing includes risks, including fluctuating prices and loss of principal.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

Asset allocation does not ensure a profit or protect against a loss.

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