Posted: 11/14/24 By: Alexis Delia, Investment Advisor for Tilia Fiduciary Partners
Let’s face it: when it comes to building wealth and securing our financial futures, investing is one of the most powerful tools at our disposal. Yet, many women still hesitate to engage in the stock market. A Fidelity report found that only about 33% of women consider themselves investors, despite the fact that when they do invest, women tend to outperform men by a small, but important, margin. So why aren’t more women investing? And more importantly, why should we be?
Here’s why getting into the stock market is not just a good idea but must for women.
Closing the Wealth Gap
We know about the gender pay gap—women earn less than men on average, and we’re more likely to take time off work to care for kids or aging parents. This means less money flowing into our bank accounts over the year; But the stock market offers us a way to bridge that gap. By investing, we give our money the chance to grow over time, helping us catch up and even surpass those lost earnings. Investing is one of the best ways to make sure we’re not left behind financially.
Keeping Up with Inflation
Simply keeping money in a savings account feels safe, but here’s the problem: inflation. That beast quietly eats away at the value of our money over time. With standard savings accounts offering little to no interest (on average a standard savings account is earning 0.4%), our hard-earned dollars lose purchasing power in the long run. Investing in stocks, on the other hand, gives us the chance to not just beat inflation, but grow our wealth. Stocks historically deliver higher returns than inflation, so our money is working for us instead of sitting idle.
Living Longer - (Which Means We Need More)
Statistically speaking, women live longer than men - which means we need more money to support ourselves, and our loved ones, in retirement. The earlier we start investing, the more we can take advantage of those sweet compounding returns to build a bigger nest egg. Even small investments now can lead to huge payoffs down the line. The stock market can be a crucial lifeline to ensure that we don’t outlive our savings.
Achieving Financial Independence
For many years, women have often relied on others—whether a spouse, partner, or family—for financial security. While there’s nothing inherently wrong with that, it often means women are left out of important financial discussions. However, everyone—regardless of gender, career, or background—should understand how to make their money work for them and their families. This knowledge is essential for building a secure financial future. True financial independence goes beyond earning a paycheck; it’s about creating wealth that grows consistently and passively. Investing is the key to achieving that independence, allowing us to build the financial freedom to live life on our own terms.
Building Confidence
One of the biggest reasons women don’t invest is because we sometimes feel we don’t know enough about the stock market. But here’s the thing: we don’t have to be experts to start. In fact, when women do invest, research shows we actually tend to outperform men. That’s because we often take a long-term, thoughtful approach. By starting small, learning as we go, and sticking with it, we can build confidence in our financial decisions—and that confidence is powerful.
Taking Advantage of Compounding Growth
Have you ever heard of "compound interest"? It’s the process where money you’ve invested begins making more money via annual returns, interest income, and dividend income. Over time you’ll watch your investments begin to grow at an exponential rate. For example, if you invest $10,000 per year and it grows at an average rate of 7%, after 10 year, your investment would grow to nearly $140,000. In 20 years, that would grow to almost $440,000. In this scenario, not investing your money would result in having $240,000 less, over a 2o year period. The key is to start early, because the longer your money has to grow, the greater the potential for significant returns.
Investing with Your Values
Many women care deeply about how their money is used, and today, there are more options than ever to invest in companies that align with your values. Whether it’s sustainability, diversity, or social responsibility, investing allows us to not only grow our wealth but support causes we care about. This is where Environmental, Social, and Governance (ESG) investing comes in—a way to put your money into companies that do good while still aiming for financial returns.
So, What’s Stopping You?
For women, the stock market isn’t just a good idea—it’s a must. Investing allows us to catch up on lost earnings, protect ourselves from inflation, and prepare for a longer life. It helps us achieve financial independence, build confidence, and even support the things we care about most. The earlier we start, the more time our money has to grow, and that’s how wealth is built.
You don’t have to be an expert to start. All it takes is that first step. Because when we invest, we’re investing in ourselves and our futures. And that’s something we all deserve.
Source: Fidelity Investments. (n.d.). 2021 Women and Investing Study. https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/about-fidelity/FidelityInvestmentsWomen&InvestingStudy2021.pdf
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