This article was published on 12 September 2019. Some information may be out of date.

Why are women more cautious with investments, and should we take more risks?

In some ways women are better investors than men. So how come we often end up with lower savings?

Many women are reluctant to make riskier investments. That might sound like a good thing. There are certainly some stupid financial risks out there! But sensible higher-risk investments, over the years, bring in higher returns — interest, dividends and so on. If you follow a few rules, you won’t be tripped up by risk.

Before we go into that, though, let’s look at the ways women tend to invest better than men.

Lots of research shows:
  • Women are less likely to trade investments often. And frequent trading is not clever. In one 20-year study, while the US share market rose 7.7% a year, the average investor made 2.6% because they traded often.
  • Women are less inclined to try to time markets — for example to say, “I think property prices have risen too far and will fall soon, so I’m selling my rental property now.” Or ditto for the share market.

Timing markets is no smarter than trading frequently. While it’s true that a rapidly rising market will turn downwards eventually, nobody knows when. Often market timers sell, only to watch miserably from the sidelines as the market continues to climb for a year or more.

When the downturn finally comes, they might feel better. But when should they get back into the game? Before they know it, they’ve missed out on another substantial gain. Even experts often get timing wrong.

Meanwhile, non-timers — more often women — leave their investments alone and get on with their lives. And usually end up better for it.

So far so good. But what about risk?

A recent Financial Markets Authority (FMA) survey found that only 3% of women would take substantial financial risk, compared to 7% of men. Meanwhile, more than a third of women were unwilling to take any financial risks at all.

Why? Probably lack of knowledge and confidence. More than two-thirds of the people who are very confident in our financial markets are men, says the FMA.

It’s hardly surprising, then, that a lot more men invest in shares, property and higher-risk KiwiSaver funds, while many women stick with conservative KiwiSaver funds and bank term deposits that bring in low returns.

If that’s you, how can you take more risk with at least some of your savings, without taking silly risk?

Here are the rules of riskier investing:
  • Diversify — spread your money out, so if one investment goes down that’s likely to be offset by another going up. The easiest way to diversify is in a KiwiSaver fund or a similar non-KiwiSaver fund.
  • Risky investments go up and down. Stick with them through thick and thin. It’s human nature to worry when your savings balance falls, but moving to a lower-risk investment then is a bad move. As long as your investment is diversified it will recover. Sometimes it takes a few years, but the markets always come back up.
  • Invest only money you can lock away for at least ten years. You don’t want to be withdrawing spending money soon after your balance has plunged. As you get closer to spending time, move your money to lower risk.
  • Keep putting money in, regardless of what’s happening to the markets. If share prices have fallen, you’re buying bargains!
  • Avoid investments you don’t understand. Often they are deliberately confusing, so you don’t realise how risky they are.

Over the next months, we’ll look more closely at many of these points.

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This column is supported by the Financial Markets Authority to encourage women to take an interest in KiwiSaver and investing. Visit for more information. Mary’s views do not necessarily reflect those of the FMA.

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it.