Investing is one of the best ways to secure your financial future and ultimately reach financial independence. Historically, women have been less likely than men to invest, but that gap is slowly closing.
As women become more active investors, they can help themselves and other women. An increasing number of companies and nonprofits are creating opportunities to invest in female-led businesses and work specifically with female financial advisors. Data has repeatedly shown that advancing women benefits everyone.
Let’s talk about why you should invest in other women and how to get started.
In this Article:
Why Should Women Invest in Each Other?
It’s no secret that women have been underserved in our economy and many others for generations. Women participate in the workforce at lower rates than men (often not by choice), earn less and are in leadership positions less often than men.
No one understands this inequity quite as well as other women. By investing in each other directly and indirectly, women can elevate themselves financially and make a measurable impact on each other’s lives.
But it’s not just women who benefit when people invest in women. Data shows that closing gender gaps in the workplace could add up to $28 trillion to annual GDP. Since women reinvest a greater portion of their income into their families and communities, investing in women lifts everyone up.
So how can women invest in each other? Let’s break it down.
1. Invest in Yourself First
As we mentioned above, women invest a significantly larger percentage of their income back into their families and communities. Unfortunately, that means many women aren’t making outside investments that could improve their own financial future. If you’re a woman and ready to start investing, the most important thing you can do is invest in yourself.
According to a 2020 Gallup survey, only about 52% of women own stock, compared to 58% of men. While the gap has been shrinking, it’s not shrinking quickly enough. And considering women tend to live longer than men, it’s perhaps even more important for women to invest.
A part of this investing gap comes from a lack of confidence. In a study from Fidelity Investments, 60% of women were worried about money, but only 47% were confident discussing finances and investing with an advisor. Interestingly, female investors do outperform men by a small percentage.
2. Use an Advisor that Favors Women
When you’re ready to start investing, consider using an advisor that makes it easy to invest in other women.
One example of a company that does this well is Ellevest, a robo advisor created by women for women. The company’s algorithm factors in the wage gap, women’s longer lifespan, and the fact that women more often take career breaks to focus on family. Read our Ellevest review to learn more about the company and its values.
3. Work With Other Women
One of the best ways you can invest in other women is to hire a woman to help with your investing.
Women are underrepresented in the financial industry. Data from the Bureau of Labor Statistics shows that women make up just 34% of financial advisors. The numbers get even worse when you look at fund managers; Morningstar reported that less than 10% of mutual fund and exchange-traded fund (ETF) fund managers were women in 2018.
Since female investors see slightly better outcomes than their male counterparts, hiring a female financial advisor might be in your best interest.
4. Invest in Companies or Funds That Promote Women
A great way to invest in other women is to speak with your dollars. In other words, invest in companies and funds that promote women.
ESG investing is a way of investing in causes that are important to you. ESG stands for environmental, social, and governance—three factors that determine the social responsibility of a company or fund.
There are plenty of ESG investing strategies that focus on women. Ellevest offers an impact investing option that seeks out companies with female leadership, as well as policies that advance women. This trend is only growing; many major brokers such as Betterment have introduced ESG funds that focus on women.
You can support companies that promote women by investing in a venture capital firm like Women’s Venture Capital Fund, which specializes in funding female-led startups.
5. Support Financial Literacy for Girls
Women have made considerable progress toward financial equity. Gender, employment and investing gaps have gradually decreased over the years, and many sectors are focusing on female empowerment.
A report from the Girl Scout Research Institute shows that young girls today feel far more confident in their own abilities than previous generations. The vast majority of respondents age 8-17 said women were as likely as men to be financially responsible, that men and women should have an equal say in a family’s finances, and that men and women are equally likely to run successful businesses.
Unfortunately, tangible results aren’t quite as optimistic. Women still have worse financial results than men, especially when compared to their male partners. Women are less likely to be the family breadwinner or manage the family's finances.
Investing in female financial literacy can help to close these gaps. Organizations such as Invest in Girls promote financial literacy for girls and, as a result, increase the number of women in financial industries.
6. Find a Mentor or Mentor Another Woman
Women are stronger when they work together. If you’re in the early part of your career, finding a female mentor in your industry is a great way to make strides. If you’re more established in your career, especially if you’re in a leadership position, you can pass along important knowledge and experience by mentoring other women.
The Bottom Line
Women have long been underserved in the economy, but the gaps are slowly closing. When women invest in other women, they can help financially lift up others, while also lifting up themselves. If you’re a woman, start by investing in your own financial future.