Dr. Odiri Oginni is Managing Director and CEO for United Capital Asset Management Limited.
Women are playing a greater role in investment decisions regarding retirement savings and stock market participation than ever before. However, despite this growing participation in investing, many women still report lower confidence in their investment decisions compared to men. The lower confidence levels that women struggle with in investing can be attributed to a number of factors including limited investment experience, social influences, lack of financial knowledge and cultural nuances.
A study by Bank of America revealed that while more than 85% of women are confident in managing their everyday financial tasks such as paying bills and managing a budget, only 53% are confident in managing investments and 44% in creating a diversified portfolio.
Confidence is a key enabler to help drive women to invest, and lower confidence can impact long-term financial security, particularly in retirement. This makes it essential to understand the factors that influence women’s investment confidence as well as how to close the gap.
1. Investment Experience And Financial Knowledge
While financial knowledge is crucial for women, research has shown that this is not sufficient for building women’s confidence in investing. This is because women are also less confident in their knowledge. Confidence is built through hands-on experience such as actively managing investments, engaging in financial discussions and making independent financial decisions.
Women need consistent exposure to investment activities. Financial advisors can help bridge this gap by creating spaces where women can learn, ask questions and make informed choices without fear of judgment. Personalized financial education, coupled with real-world investing experience, can significantly enhance confidence levels.
2. The Power Of Social Influence And Role Models
Women are more likely to invest when they see other women doing the same. Peer networks, women-focused investment communities and mentorship play a crucial role in shaping confidence.
A study on the impact of social interaction on women’s financial decisions found that frequent visits to family or friends increase a woman’s likelihood of investing in stocks by 1.1%. This probability rises to 11% when the investment opportunity is a savings account. Additionally, women who engage in sports or regularly visit a health club are 7.9% and 6.6% more likely, respectively, to invest in financial opportunities.
This suggests that social reinforcement plays a key role in women’s financial decisions and can be a driver of confidence in investing. Financial institutions and advisors can create spaces where women can interact with others including family, friends, colleagues and significant others who can provide emotional support. As women interact socially, they learn about historical records and successful strategies, which can boost their confidence in investing.
3. Perception Of Risk And Investment Behavior
One common research finding relating to women’s investment behavior is that women are risk-averse. In reality, this risk-averse tendency can be a result of a more conscious approach to risk-taking where women take a calculated, long-term approach to investing rather than a speculative, short-term approach.
Women’s investment confidence can grow when they understand risk management strategies, such as diversification and asset allocation. Financial education that reframes risk as an essential component of wealth-building, rather than a potential loss, can help women invest more boldly and with greater confidence.
4. Financial Systems Must Adapt To Women’s Needs
Many traditional investment platforms and financial services have been designed with male investors in mind. Women, however, often approach investing with different priorities, such as long-term financial security, impact investing and aligning investments with personal values.
Financial institutions and advisors that tailor investment products to these priorities—offering goal-based investing, ESG investment options and intuitive platforms—can make investing more accessible and appealing to women.
5. Behavioral Strategies To Boost Investment Confidence
Behavioral finance research suggests that small, incremental investment steps can help build confidence over time. For example, platforms that allow women to start with smaller investments, track progress toward financial goals and receive positive reinforcement can encourage long-term investing habits.
Additionally, reframing investment success in terms of progress rather than immediate returns can shift mindsets and reduce hesitation. Encouraging women to adopt a long-term perspective and celebrating financial milestones can help sustain their confidence in investing.
Closing The Confidence Gap In Investing
The key to increasing women’s confidence in investing lies in experience, social reinforcement, risk education and financial systems that recognize their unique needs. Financial institutions and advisors have an opportunity to reshape the narrative by providing the right tools, networks and education to empower women as confident investors.
For women looking to build investment confidence, the best approach is to start small, seek supportive financial communities and embrace investing as an ongoing journey rather than a single decision. The more you engage, the stronger your confidence will become, which will ultimately lead to greater financial independence and long-term wealth creation.
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