Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.
Women are paid less than men and are more likely to leave the workforce to take care of loved ones, both of which negatively impact the amount of money they have to save and invest over the course of their lives. Despite this, just half of Americans (50%) believe women have disadvantages compared to men when it comes to long-term investing, according to a new NerdWallet survey.
The survey was conducted in July 2021 — in the midst of the pandemic that has only deepened women’s systemic and socialized disadvantages. Yet the fact remains that in order to invest and build wealth for the future, women need to contend with these hurdles. Below is advice for how to combat five investing disadvantages that disproportionately impact women.
1. Evaluate your risk tolerance
Around 1 in 6 Americans (16%) believe women being more risk averse than men is a long-term investing disadvantage, according to the NerdWallet survey. It’s important to consider and acknowledge your personal risk tolerance when choosing investments. But if you’re so risk-averse that you’re unlikely to hit your financial goals or you’re avoiding the stock market altogether, it’s probably time to reevaluate your strategy. Diversification is one effective way to reduce your risk while still growing your portfolio.
You can diversify your portfolio not just by asset class — for instance, stocks and bonds — but also within asset classes. That could mean investing in companies of different industries and different sizes. If a specific company or industry underperforms, the rest of your portfolio may balance it out.
Diversification doesn’t have to be complicated. Funds, like exchange-traded funds or mutual funds, are made up of a mix of investments, so you’re diversified within a single asset. Aim to find a balance between your tolerance for risk and your goals, and use diversification to make you more comfortable investing for your future.
2. Increase savings as you can
The survey shows that close to a quarter of Americans (23%) believe women earning less than men is a long-term investing disadvantage because they have less money to invest. As of 2018, women earned, on average, 82 cents for every dollar men earned. And this gap is significantly wider for many women of color. Inequality of earning means women often have to save a higher percentage of their income than men do.
If you have a 401(k) through work, you may be able to set up automatic incremental increases — for example, 1% each year. You can also choose to bump up your contributions as you get raises if you can continue living comfortably on your old take-home pay.
But because part of the wage gap is due to the difference in jobs worked — oftentimes gender norms and expectations tend to encourage men and women to go into different industries — some women may not have enough income or earn the raises required to follow that advice. In that case, your best option may be to seek new job opportunities or fields. And if you have a partner with whom you split expenses, discuss contributing to the household proportionate to your income if that would give you more money to put away.
3. Keep investing during career interruptions, if possible
More than 1 in 5 Americans (21%) believe career interruptions associated with caregiving responsibilities are a long-term investing disadvantage women have compared to men, according to the survey. These interruptions have been magnified by the pandemic, as millions of women have left the workforce, many because of lack of day care or in-person schooling. But if family finances still allow, those who have a spouse with earned income don’t have to stop investing.
A spousal IRA allows the non-earning spouse to contribute up to $6,000 per year (or $7,000 for those age 50 and older), as long as the couple files taxes jointly. If it’s not reasonable for you and your spouse to max out both your IRAs, you can split whatever money you would put in IRAs and contribute to each equally.
You can also use household income to contribute to a taxable brokerage account in your name. You won’t have the tax benefits of a retirement account, but there aren’t limits on contribution amount or income, and you can pull your money out whenever you want.
4. Seek out resources
Around 1 in 8 Americans (13%) believe women’s lack of investing knowledge is a disadvantage compared to men, survey results show. Finding free or cheap financial advice and resources is easier than ever, though it’s important to vet your sources to make sure they’re legitimate. Your bank or broker probably has financial tools and educational content, and you can also look for additional financial resources online or from a book in your local library. Fact-check resources that are new to you and be skeptical of any source that promises you a certain return on your investment if you follow their advice.
Understand, too, that you don’t need to know everything about investing before you start. The best thing you can give your investments is time to grow, so aim to learn the basics and dive in. An inexpensive way to get started investing is with a robo-advisor, which uses algorithms to manage your investments based on your goals, risk tolerance and time horizon. As you learn more about investing, you can opt to take a more active role in managing your portfolio if you choose.
Varies by advisor
$150 and up
per month (free initial consultation)
no promotion available at this time
no promotion available at this time
no promotion available at this time
5. Encourage other women to talk about and start investing
Finally, NerdWallet’s survey found that 18% of Americans believe women have a long-term investing disadvantage because of a lack of encouragement to invest from others, as compared to men. As early as childhood, girls may be taught about managing money from the standpoint of budgeting, whereas boys might be taught about managing money from the standpoint of wealth building, or investing. By being willing to discuss financial topics with friends, colleagues and loved ones, women can encourage each other to invest in their futures.
Money is still taboo in certain circles, but it doesn’t need to be. Ask women you trust how they’re building wealth for the future, or even if they’ve started thinking about investing. By opening up the conversation, you’re making it OK for women in your life to discuss investing concerns and uncertainties, but also strategies and successes with you and, ideally, with other women as well.