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Women are better investors than men – they just don’t know it yet

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By John Beveridge - 
women investing confidence

Statistically, women are marginally better investors than men but they are hamstrung by two separate but related problems.

Firstly, they invest much lower sums of money than men, which naturally proportionally reduces their returns and second, they have much lower levels of confidence about their investing skill.

Combined, these two problems are the Achilles heel for women investors and they must both be tackled over time so that the generally slightly superior returns women generate can be converted into greater investment and retirement nest eggs.

Women not as confident about investments

A survey of 1,000 super members from the giant Australian Retirement Trust (ART) showed that women continue to lack confidence in how much they can save for retirement and their ability to invest compared to men.

Only 30% of women are happy with the amount in their super fund, while a similar number of women members said they feel secure about their financial situation overall.

ART executive general manager of advice, guidance and education, Anne Fuchs, said while women are getting better at carving out time for self-care, that same mindset still needs to be applied to saving and investing so that it becomes a habit.

“What we decide to save or invest in today can make a big difference to the life we lead tomorrow, so we would always encourage members to take advantage of free budgeting tips and tools we offer to start engaging with super and where appropriate consider options like salary sacrificing extra contribution,” she said.

Australian Retirement Trust has long championed the need to improve female super balances to match those of men but has recently compiled figures that shows there is a very long way to go to get there.

Women need to catch up, and fast

The figures show that women work an average of 32 hours a week, compared to more than 39 hours a week for men and that there are fewer women in the workplace, with 62% of women working compared to 71% of men.

That results in a super gap of 14.1% across all ages and 18% in senior management.

These figures are also worrying because while women live four years longer on average, they also tend to retire earlier at an average age of just 52 years.

That leaves a sizable retirement savings gap of 40%.

Women invest less, robbing themselves of returns

A survey by Finder also revealed that women tend to invest less than men, which leads to underperformance.

Male investors have $88,775 invested in shares on average – double women’s average of $44,125.

That plus extra contributions has caused the investment balance of men to grow much faster on average than women over the past two years.

Women’s average balances have only increased by 3% since January 2022, while men’s balances increased by a whopping 88%.

That came about even though when women do actually invest, they are better investors than men in terms of the average returns they generate.

Vanguard shows lack of confidence still a problem

These findings were backed up by a Vanguard study of over 1800 working and retired Australians released last year which found a staggering difference in confidence levels between men and women planning for retirement.

It found that almost half of Australian women do not have a clear strategy for retirement in comparison to their male counterparts, with 46% of women surveyed saying they “had no plan” or “did not know what they needed for retirement” in comparison to the 73% of men stating they have a “general”, “good” or “exact plan” for how they will financially prepare to reach the retirement lifestyle they want.

Half of men surveyed ranged from “very” to “extremely confident” about making decisions related to managing their finances, while only a third of female respondents indicated the same.