Women get better returns on their investments than men—here’s why

As it turns out, women investors have a slight edge over men when it comes to long-term gains, according to Fidelity's 2021 Women and Investing Study.

Women's investment returns were 0.4% higher than men's, on average, according to the report, which analyzed the annual performance of 5.2 million customer accounts from January 2011 to December 2020. 

There are a few reasons women tend to broadly outperform men, says Lorna Kapusta, head of women investors and customer engagement at Fidelity. The first is that they trade less, allowing them to ride out market lows and avoid extra fees. They also tend to invest more consistently, which means they aren't trying to time the market. Past research has also found women outperform men for similar reasons.

Still, despite their performance, women are less confident than men when it comes to judging their financial prowess: The report, which also surveyed 2,400 American adults actively contributing to a workplace retirement account, finds only 4 in 10 women are comfortable with their investing knowledge.

"I don't see this as a women versus men thing. What I really want this to focus on is the myth that women aren't good investors," says Kapusta. "Women have self-doubt. But what it shows you is that when they do invest, they are very good at it."

Women investors are still less confident than men

Kapusta says a big hurdle to women being comfortable with investing is that they often think they need to learn more to make sound investments, whereas men are comfortable jumping in. That also isn't new information.

"Women still doubt their abilities," she says.

They don't need to. One way to become more confident is to start talking about money and investing with friends and peers. "When women come together, the floodgates open," Kapusta says. She suggests hosting a money talk with friends, or joining a virtual discussion, like one that Fidelity hosts. 

Though you might not know everything about mutual funds and stock indexes, breaking the taboo with people you trust can inspire you to invest more, says Kapusta. I can speak to that firsthand: I've hosted a money salon with friends and found it to be helpful and cathartic. Our discussion went far beyond investing, but my friends who don't usually talk about money said it made them feel more comfortable with their financial knowledge.

Kapusta also says that you don't need a huge chunk of change to get started: even contributing a percentage or two of each paycheck is better than nothing.

"We always say, start small," she says.

And if you need some inspiration on the importance of investing, check out these articles:

• Investing some savings is one of the best ways to grow your wealth
• The important money move that women aren't making
• Why young investors should choose a Roth IRA
• Why you should still invest in a 401(k) even if retirement seems impossible

Sign up now: Get smarter about your money and career with our weekly newsletter