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Mar 1, 2021

Are Women Better Investors? Stash Data Flips Gender Stereotypes

By Stash Team

Women tend to remain level-headed during market fluctuations and men are more likely to panic sell.

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Across the media and popular culture, women are often stereotyped as being less equipped than men to manage their money. 

But in a recent survey, Stash found that women may handle market fluctuations better than men do. When the Dow Jones and S&P 500 fell by more than 20% in March, 2020, as the of Covid-19 pandemic started unfolding, female Stash investors held on to their investments, while male investors were more likely to sell them. And this data is consistent with data from earlier market dips. 

From March to July, 2020, during the peak of the pandemic, male Stash customers were 17% more likely to “panic sell” their investments than female Stash customers, who were more likely to hold onto their investments and ride out the volatility.1 

Female Stash investors were also 10% more likely than their male counterparts to purchase investments during this period of the pandemic. Additionally, women were 10% more likely to invest in a diversified portfolio, purchasing shares of ETFs versus single stocks.1 

Women were also more likely than men to increase their retirement investments during this period, compared to October, 2019 to February, 2020, or the period before Covid-19.2 Female Stash investors were 63% more likely than men to increase their retirement investments during the pandemic.2 

Still, women demonstrate less confidence when it comes to making long-term financial and investment decisions, according to research from the Financial Industry Regulatory Authority (FINRA). Thirty-four percent of women surveyed said that they didn’t feel comfortable making investment decisions, compared to roughly 50% of men.

Historically, female Stash customers have actually demonstrated investing habits that might upend some misconceptions about women and their finances.

How women historically invest at Stash

In 2018, female Stash investors performed similarly to how they did during the March, 2020 market drop. On two particularly volatile days for markets in 2018—February 5 and 8—when indexes such as the S&P 500 suffered big losses, men were 87% more likely than women, on average, to sell an investment. By selling after a market drop, men effectively locked in their losses.3  

And that behavior continued into the following week, with male users still being 76% more likely than women to sell an investment, compared to female users.3

While women tend to perceive themselves as less tolerant of risk than men, they’re actually not. In 2018, nearly 90% of female Stash users self-identified as having a low or medium risk tolerance when they first open an account, compared to 75% of men. This means that female Stash users perceive themselves as less willing to make riskier investments, opting for less volatile stocks and ETFs—they want safer investments, in other words.3

The data, however, revealed that female users are just as likely as men to take on investment risk. Roughly 50% of women have invested in higher-risk investments on Stash—the same as men.3

So, while women may view themselves as more conservative investors, in practice, they’re not.

Follow the Stash Way

All investors, including women, can follow the Stash Way, which includes regular investing, investing for the long term, and creating a diversified portfolio. By investing regularly and over time in a portfolio that has a mix of stocks, bonds, and ETFs, you can potentially spread your risk across different investments, which can help you during periods of market volatility. 

Stash’s diversification analysis tool can help you build a portfolio suited to your appetite for risk. You can also open a Smart Portfolio4 with Stash, which is a personalized portfolio that Stash’s Investment Team of financial experts creates for you based on your risk profile. Stash actively monitors and manages the account for you, and rebalances when necessary. 

How women can start investing with Stash

You can join the millions of women already investing with Stash today. By signing up with Stash, you can enter the market and start building your financial future by investing for the long-term and riding out the highs and lows of the market. 

You can start investing for any dollar amount with Stash, or open a retirement account with $5.

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Written by

Stash Team

1For this study, Stash looked at a total of 3,695,136 customers from March-July 2020. Of the 3,695,136 customers: 1,355,891 (37%) identified as female and 2,339,245 (63%) identified as male.
2This data includes purchases made via an IRA on Stash during the applicable time period. This does not take sales into consideration.
3Stash analyzed self-reported responses from 640,000 Stash users (defined as individuals who have a personal invest account) in the first week of August 2018. The sample group was roughly one-third women and two-thirds men.
4Please note that Smart Portfolio is only available in the mobile app. This type of account is a Discretionary Managed Account. This is an individual taxable brokerage account that Stash has full authority to manage according to a specific investment mandate. The investment team at Stash built these portfolios with the goal of optimizing risk-adjusted returns. This is achieved by utilizing the diversification benefits highlighted by modern portfolio theory. The portfolios consist of well diversified ETFs that provide clients with broad exposure to the stocks of companies of all sizes across all industries and geographies and bonds of various issuers. The portfolios aim to optimize returns given a user’s overall risk profile. Stash will automatically manage a Client’s portfolio based on an algorithm that evaluates the Client’s risk profile and selects appropriate investments for the client. Stash does not guarantee any level of performance or that any client will avoid losses in the Client’s Stash Account(s). Any investment in securities involves the possibility of financial loss. 
Stash through the “Diversification Analysis” feature does not rebalance portfolios or otherwise manage the Personal Portfolio Account for Clients on a discretionary basis. Each Client is solely responsible for implementing any such advice. This investment recommendation relies entirely on the responses you’ve provided regarding your risk tolerance. Stash does not verify the completeness or accuracy of such information. Investing involves risk, including possible loss of principal. No asset allocation is a guarantee against loss of principal.
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