Women’s Approach to Wealth Management
When it comes to retirement planning and wealth management, it’s fair to say women have much more at stake than men do. Women typically live longer than men, earn less than men for similar work, and spend more time out of the work force.
Identifying goals and planning for financial success and security throughout life is important for all of us, yet there are some distinct differences between men and women when it comes to risk tolerance, savings habits, and investment style. In many ways both genders can benefit from the characteristics shown through studies to be more typically a women’s approach to wealth management. Let’s explore some key trends and traits.
#1 Women Are More Likely to Stay the Course During Market Turbulence
Studies, show that women are less likely to veer from long term goals because of fluctuations in the market. And that they tend to keep long-term goals in focus rather than trying to “beat the market.”
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#2 Women Save More of Their Income
While women typically earn two-thirds of what men do, and their retirement balances are smaller on average ($63,700 versus $95,800 for men), when adjusted for their compensation differences, women actually save more of their income. Total employee deferral levels for women are 8.3% versus 7.9% for men. This, combined with the average employer match of 4.4% gives women a total savings rate of almost 13%, versus 12% for men.
Women are also more likely to take advantage of the catch-up savings opportunity once they hit age 50. 23% of eligible women make catch-up contributions versus just 21% of men. These contributions are a good opportunity for anyone looking to grow their nest egg, but particularly for older women, as they are an opportunity to fill a gap that may have been created during time off from the workplace.
#3 Women Take on Less Risk
The goal for any investor is to achieve the highest rate of return while taking on the lowest amount of risk. Study after study shows women use this strategy.
On average, women hold more balanced portfolios than men, which is beneficial during times of extreme market volatility. And, women tend to hold more blended and balanced portfolios than men. A more diverse portfolio and investment strategy offers some security against the sort of market volatility that can wipe out a riskier, less diverse portfolio.
#4 Women Tend to Invest More Appropriately at Each Life Stage
Over time, one’s risk tolerance and goals shift from portfolio growth to asset protection. Fidelity analysis shows that women’s investment strategy overall is more appropriately aligned, which suggests they’re better prepared for their financial needs at each life stage.
Women and Wealth Management
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