Women Regularly Outperform Men in the Stock Market—So Why Are We Still So Afraid to Invest?

There remains a frontier that women have yet to truly conquer: investing.

A recent study by Merrill reported that while women's confidence in nearly all other financial matters is equal to or greater than men's, when it comes to investing, we dramatically underestimate ourselves. Just 52 percent of women say they are confident about investing, compared to 68 percent of men. The study also notes that failing to invest is the top financial regret among women. These statistics are especially troubling when you consider that when women invest, they outperform their male counterparts, according to a new study by Fidelity that analyzed more than 5 million customers over the last 10 years.

"Many women have grown up with the mindset that money is one of the few hush-hush topics that should be avoided in polite company at all costs," says Ella Gupta, the personal finance ambassador for the money app Greenlight and the author of Gen Z Money $ense: A Personal Finance and Investing Guide. "But if you want to be in control of your financial life, overcoming a fear of money is necessary."

That's what this package is about. First, we'll talk about the disconnect between financial confidence and performance, and what we can do to change it. Then we'll discuss sound strategies for getting started investing…at your own pace, whether it be using fractional apps, angel-investing in companies that mean something to you, buying real estate, or dipping a toe in the seductive pond of cryptocurrency. Finally, we'll answer the most important question: Why is it so important for women to invest now?

As the Merrill report notes: "Today, women's lifelong financial wellness is at a tipping point. ... They are poised to move into true financial independence, enjoying all the freedom that it brings. Yet there is still a trail left to blaze."

So, how to start?

"Women tend to take a longer-term view on finances than men, which gives them a powerful advantage to approach investing in a smart, disciplined, and future-oriented way," says Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America.

The first step toward gaining financial confidence is to begin simply talking about money. This is no small feat. The Merrill report, for instance, found that 61 percent of women would rather discuss their own death than money.

Try establishing your own trusted financial community, suggests Gupta. And use this community to learn from the experiences of other women, and openly exchange tips. "Community also provides accountability throughout the process. You could even begin an investing club with other women, to discuss ideas and share research into prospective funds or companies," she says.

"Speak openly and ask questions about investing and personal finance more broadly to friends, families, employers, or financial experts," says Sabbia. "Seek input and guidance, and ultimately create a plan for trickier financial moments such as investing. Trusted advice can be what you need to eliminate decision paralysis and move forward."

Then, once you've got the conversations flowing, get your cash flowing too.

Educate yourself and face your fears.

You may be under the mistaken impression that investing know-how is totally instinctual, and thus you must have been passed over by the investing fairy during the distribution of such natural talents. That, however, is not the case. "While investing has been made to seem complex, and it certainly can be, even women brand new to investing can successfully get started with an education-first approach," says Sabbia. "Whether it's personal research, an online class, or seeking expert advice, learn about market fundamentals, including the risk and returns of equity versus bonds."

To build her confidence about getting started, 32-year-old Texan Maayan Bobylev began devouring inspirational books about money, like Smart Women Finish Rich by David Bach and Ramit Sethi's I Will Teach You To Be Rich. She also worked with a money mindset coach who helped her reprogram limiting beliefs around money and investing. "I've always known that consumer debt is dumb," says Bobylev, a mother of three. "But the level of 'avoid debt' advice that I received had always far outweighed any meaningful advice about how to approach investing."

Start small and earn big.

Take the time to really consider and flesh out what you're ultimately hoping to achieve from investing— whether it be a quick return or a slow build of wealth over time. By establishing concrete goals, you'll be better able to develop an overall investment strategy. "After you've set a goal, break it down into bite-sized benchmarks and get started," Sabbia says. "The notion of needing to have a lot of money to begin investing is not true. Ease into investing by starting small, even if it's only $20."

Use whatever amount of money you're comfortable with to initially establish an investment account, and then create a plan to systematically continue adding to that account. "The longer you add money, the more you will see results," says Sabbia. "The key here is to make regular, consistent contributions to your investment accounts, so you're always making progress toward your target."

Utilize all the tools available—and think outside the box.

As you embark on your investing journey, it can be a good idea to get your feet wet by capitalizing on workplace benefits offered by employers, such as investing in 401(k) plans and health savings accounts (HSAs). Both of these financial vehicles are great tools to start building wealth today, that you will be able to rely upon later in life, says Sabbia.

"Women should start savings plans early and maximize contributions to shore up resources for the long-term," says Sabbia.

HSAs are particularly good choice for this because unlike other use-it-or-lose-it vehicles, HSAs are portable and controllable—meaning you can begin putting money in them now and they can be used to pay for qualified healthcare costs well through retirement.

Don't wait.

Why the rush? Because time is your greatest advantage when it comes to investing and building wealth. "Compound interest—dubbed the eighth wonder of the world by Albert Einstein—is powerful, and time has a huge impact on your nest egg," says Gupta. "Investing can seem daunting, but once you take the first step it becomes easier."

Kathy Osborne, 32, owner of Fort Myers, Fla.-based public relations agency kamelPR, took the plunge in 2021. "Last year was a big year for me—I bought a house, married my husband, got an office, hired part-time employees, and grew my business by three times after founding it two years ago," she says. "I finally felt like things were heading in the right direction and I knew that I needed to double down on putting the financial infrastructure in place for my future."

She started by pulling together investment categories that appealed to her, read the book The Psychology of Wealth by Charles Richards, and leveraged her business network contacts for educational guidance.

She then invested $6,000 in Apple, and angel-invested in companies that she felt were building products she believed in. "In retrospect, investing has made a huge difference in my view of long-term liquidity," says Osborne. "There's a sense of security in knowing that at any point, I can sell those stocks at market price for cash, or hold [them] and build my future."

The future is now.

Even amid the uncertainty of a global pandemic, women across the country made it a priority to start investing in 2020 and 2021. Jackie Alvarez, a 34-year-old travel marketing professional in Los Angeles, had always known that she should be investing but never did much more than contribute the minimum to her 401(k) accounts.

When the effects of COVID halted the tourism industry, Alvarez pivoted into a more stable industry, where she had the opportunity to start putting her financial plans into action. She used the fractional investment app Stash to make her first investments and got started with just $25. "It's been so fun to start really watching the market, and make decisions about where to invest," she says.

Alvarez's new confidence led to other financial epiphanies. "It sounds a little silly, but once I started there, and saw how accessible it was, investing as a whole became way more accessible and I upped my 401(k), doubled down on a separate investment fund through my bank, and started saving more," she says. She now contributes $100 each month to her Stash account, $200 to a J.P. Morgan account, and 12 percent of her salary to a 401(k).

For Katherine "Kitty" Cort, a 63-year-old retired special education teacher from Wellesley, Mass., getting starting wasn't easy. "I was always very much a traditional housewife with four kids at home, and never worried about investing. My husband really focused on the money," she says. After receiving an inheritance in 2021, however, she says that she realized that she needed to be more actively engaged with her finances. "I thought, 'Am I going to just let this money sit in an account? Or am I going to invest a bit so I can pass some money on to my kids?'" says Cort.

Ultimately, though, it's more about the money for Cort. "Investing makes me feel proud of myself for taking this leap, and not being intimidated by a lack of economic knowledge of how our world works," she says. "Learning about investing has given me confidence."