If the popular perception is that men are better investors than women, then it’s time to change it, at least according to a recent study by Fidelity Investments.
In a December 2016 survey of 2,995 of its customers 18 and older by the mutual fund giant, it was clear that in both the portion of one’s salary that is put into a tax-advantaged savings account and in the returns that those savings are receiving, women outperform men. And those same differences apply to Rhode Islanders as well.
For instance, the savings rate for workplace-based accounts, such as 401(k)s and 403(b)s, is 9 percent for women across the United States, while it is 8.6 percent for men. Similarly, in Rhode Island, the savings rate for these kinds of accounts is 9 percent for women, while it is 8.7 percent for men.
The savings rate for individual or retail accounts, such as IRAs, showed similar differences. Women across the United States put away 12.4 percent of their earnings, while men saved 11.6 percent. In the Ocean State, those savings rates were 11.6 percent for women and 11.3 percent for men.
Women across the nation also showed better investment returns on their savings as well, with an average annual rate of return of 6.4 percent, versus 6 percent for men. Over time, this difference could make a significant difference in how much money would be available for retirement.
In the study, Fidelity said that many of the characteristics that might lead some to believe that women were not as good at investing as their male counterparts may be the reasons, in fact, that they are better.
According to Fidelity, women are more likely to take on less risk than men. One behavior of that mindset is investing more heavily in target-date mutual funds, which adjust the asset mix in a portfolio based on the time horizon to retirement. The closer to a given retirement date the investor gets, the more conservative the investments become. Too much risk too close to a projected retirement might decimate savings.
Fidelity also found that men are far more likely to actively trade stocks, 35 percent more likely in fact. And in 2016, men who bought or sold equities made an average of 55 percent more trades than women.
In one area, women did underperform men, however. Only 9 percent of respondents to a separate survey said that women did better than men at investing.
