Closing the gender wealth gap through investment

The gender wealth gap goes beyond pay inequality. Women invest far less than men – and it’s keeping them from the financial freedom afforded to many of their male counterparts. This could prevent them from building enough wealth to achieve their financial goals. Compared with the average single man, the average single woman’s net worth is three times smaller.

That said, women actually save more than men, putting an annual average of 9 percent of their paycheck toward workplace retirement accounts, according to a 2017 survey conducted by Fidelity Investments. In contrast, men contribute an average of 8.6 percent to these accounts. 

In spite of these promising figures, money sitting in savings doesn’t multiply like it does when you invest. So why aren’t women investing?

Risk Aversion 

For starters, women are generally more risk-averse than men. Made evident by their management of money – saving vs investing. According to a survey by Wells Fargo, “Many women self-identify as conservative investors, and one mistake that conservative investors can make is putting too much of their portfolio in cash. Given the current low yields on cash and cash alternatives, a better way to attempt to manage risk is through strategic asset allocation—spreading assets among stocks, bonds, real assets, and alternative investments.”

Outdated Approaches

The investment management industry was and continues to be an old boy’s club. Most money managers are men who approached other wealthy men with new deals and investment options. This leaves many women lacking awareness of prime investment opportunities, which by default, takes away their choice. 

Fortunately, the proliferation of innovative technology has given investors significant opportunities to self-educate, gather information and make well-informed decisions. Further, these advances have helped provide access to alternative investment options.

Investment Options

Fortunately, investors have many different options when it comes to choosing the right investments to meet their needs. Beyond the basic asset classes, i.e. stocks, bonds, there are many different opportunities to invest in alternative assets. Alternative assets range from precious metals to real estate.  

Real estate is often the choice of the wealth. In fact, for more than 30 years, real estate has beat the stock market by a significant margin with less daily volatility. While some people might balk at real estate, thinking that it requires sizable down payments, there are plenty of ways they can gain access to this asset class without it costing a fortune.  

Investors could purchase shares of real estate investment trusts (REITs), organizations that pool capital from many sources to buy and/or manage commercial real estate properties. These trusts have generated compelling returns, with the MSCI U.S. REIT Index returning an average of 12.99 percent between 2010 and 2017, while the S&P 500 Index, a benchmark group of stocks, returned 10.49% in that time, according to The Balance

While publicly traded REITs can provide compelling returns, private REITs, which have traditionally been accessible only to high net worth (HNW) investors, can potentially provide even more impressive gains. 

Though things are moving forward in the right direction for closing the pay gap, there’s something that women can do about their financial futures now – by taking action. Women should not be asking themselves whether to invest, they should be choosing how to invest. 

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