When it comes to investing, the overwhelming narrative is that men have more of an appetite for risk than women. But, men and women are equally risk-taking with their portfolios, according to a new report from financial investment app Stash.
Stash, which lets users invest in ETFs and individual stocks, analyzed self-reported data from 640,000 of its 2.5 million users. Ninety percent of female users identified as having a low or medium risk tolerance.
Though the vast majority of women don’t believe they are risk takers, their behavior indicates otherwise. In reality, when it comes to investing, men and women act practically the same, according to the report.
Both men and women hold an average of five different investments in their portfolio. About 50% of women have invested in higher-risk investments like stocks or ‘aggressive’ ETFs, just like men.
The specific breakdown of portfolios looks very similar for both men and women. Females have, on average, 87% of their Stash investments in ETFs and 13% in individual stocks. Males have, on average, 84% and 16% of their portfolio in ETFs and individual stocks, respectively.
“Society has long maintained that money is a ‘man’s issue,’ oftentimes leaving women on the sidelines, without proper financial access or education. We’ve certainly made strides recently, but the historical trend likely speaks to why women err on the side of caution when it comes to labeling their own risk tolerance,” said Alexandra Phelan, Stash data scientist.
The gender pay (and investing) gap
While portfolios of men and women may look similar on a percentage basis, women invest less of their assets overall.
Women keep 71% of their wealth in cash, according to a BlackRock survey, compared to men who keep 60%. This deeper disparity partially stems from the fact that women have less wealth overall.
In 2017, women earned 77.9 cents for every dollar earned by men, which is only slightly more than a year earlier — when women earned 76.3 cents for every dollar earned by men, according to PayScale, which provides compensation data.
“It’s crucial to take the gender pay gap into account when thinking about how much money men and women are investing, or could invest. It’s absolutely possible that female users simply have less money to invest than men do,” said Phelan.
However, she pointed out that the app sees men and women making consistent contributions — whether weekly, bi-weekly or monthly — in roughly the same amounts.
Where behavior diverges
While men may not be more exposed to riskier investments on Stash, they are more impulsive, especially on down days in the market.
Stash analyzed two volatile days in February to see what trading on the app looked like. The S&P 500 dropped 113.19 points on February 5. Later in the week on February 8, the S&P fell into correction territory after plunging 100.66 points.
On the day of and day after the market dropped, on average, men were 87% more likely than women to sell an investment. In the two weeks following the market declines, on average, men were 50% more likely than women to make a withdrawal from their account.
Men and women may be just as likely to expose themselves to risky bets, but women are more tolerant of the highs and lows that come with being an investor.
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.
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