Women outnumber men as investors, statistics show. Here are 3 possible reasons.

Investing used to be a male-dominated activity, but women are slowly but steadily closing the gap. About 60 percent invest in the stock market now, according to Research on Women and Investing, and younger generations report even higher percentages of female investors.

Men still have higher average balances, which isn’t all that surprising given the gender pay gap. But the data shows that women earn better incomes than men over time. Here are some possible reasons.

Image source: Getty Images.

1. Women tend to invest more conservatively

Studies of gender differences in investment behavior have found that women tend to invest moderately or conservatively, while men are more likely to take an aggressive approach. About 53 percent of women chose a moderate approach, while only 39 percent took an aggressive approach, according to Wells Fargo. This is almost exactly the opposite of what we see with male investors: about 39% of them chose a moderate approach and 55% chose an aggressive investment strategy.

Aggressive investing can lead to bigger gains, but it also opens the door to bigger losses. By investing more conservatively, women can insulate themselves from some of the downside while still earning a decent return.

2. Women are less likely to jump on investment trends

The data also indicates that women were less likely than men to invest in something just because it’s trending. For example, a 2021 Robinhood survey found that 41% of female investors said they were not interested in investing in cryptocurrencies, compared to 24% of male investors.

In part, that could be because women report lower levels of confidence in their investing skills; this could lead them to look for more tried and true investments, such as stocks of well-known companies or index funds. They may not have the massive earning potential that many hope for from investments like cryptocurrency, but they can provide slow and steady growth over time.

3. Women are more likely to remain calm during market volatility

Fidelity found that women were 8% more likely to expect market volatility than men. Men were significantly more likely to increase their investments during uncertain periods and also somewhat more likely to decrease their investments.

Investing more could be an attempt to time the market by buying more stocks when prices are low in hopes of reaping greater rewards when the stock rebounds. But this doesn’t always work out the way investors hope – you never know when prices will bottom out and when they’ll bounce back.

Similarly, selling assets during periods of market volatility can lock in losses that you would have otherwise recovered if you had just left your investments alone. Women may suffer fewer of these losses because they are more likely to leave their portfolio unchanged during these periods.

Try it for yourself

Regardless of your gender, you can apply the above tips to increase your ROI. Review your investment strategy and consider changing it if you feel you’ve taken on too much risk, especially if you’re nearing retirement. And consider checking your portfolio less often if you’re tempted to make investment decisions based on recent stock performance.