Why 2021 Is The Year Of The Woman Investor

Updated: February 11, 2021

With every passing year, the scales of gender inequality continue to balance out.

Whether it’s politics, business, or sports, more and more women are assuming roles that have been traditionally filled by men. These changes are also reflected on a smaller scale, as women around the world take on new responsibilities and challenges in their personal lives.

Nowhere is that truer than in the investing world.

The wealth gap between men and women for generations has been one of the biggest issues facing women. On average, women in the United States own a mere 32 cents to every dollar owned by men in large part because they invest less and later than men.

But all evidence points to the tide starting to shift. As 2020 came to a close, it became apparent that many women used the year to take control of their finances and investments, even in the face of a global pandemic. The FT reported late last year that women are outpacing men when it comes to signing up for investing platforms, clearly catching up for lost time. Online brokers like Robinhood say adding women to their platforms is key to their growth in the coming year.

We sat down with some experts — and some new female investors — to figure out why this year sparked such a profound change in investing habits.

Why Women Invested More in 2020

Women had more time

Some reports say that adults spent 23 more minutes on their phones on average in 2020 due to being at home during the pandemic lockdown. It looks like for many women, that time did not go to waste.

I’ve heard from a couple of prospects and clients that the pandemic has provided some time for reflection on their lives.

“I’ve heard from a couple of prospects and clients that the pandemic has provided some time for reflection on their lives, and financial well-being has come up as an item they would like to prioritize,” Julie Quick, CFP of Cultivate Financial Wellness told us.

The proliferation of investing apps like Robinhood, Acorns, and Stockpile also make it easier for users to invest through their phones. Women can create accounts and start investing in just a few minutes. While this technology has been around for a few years, it became more mainstream in 2020.

The gender gap was highly publicized

When police brutality protests swept the country, the conversation about systemic racism highlighted a huge racial wealth gap. Financial educator Kara Perez of Bravely Go said those discussions also led to more conversations about the gender wealth gap.

She thinks that women began to consider what they could do to minimize the wealth gap, leading to an influx of new investors.

The stock market was in the news

Because economic instability was front-page news almost every day, many women felt an increased sense of urgency to be proactive and informed about their finances.

Perez said that this might explain why she received more questions about investing in 2020 than in any other year before.

Apps have made it easier

3o-year-old Breana Jones who lives in New York City and works in media had been investing in her 401(k) and IRA for years, but in 2020 she started trading individual stocks. She realized she had extra money to invest with and decided to learn more about investing with individual companies. She also knew that with the market down — which remember it was at the beginning of the pandemic — and that because of that it was a good time to start buying.

She started working with a financial advisor who taught her how to trade individual stocks. Jones uses the  Cash App to invest, which lets you buy fractional shares with only $1.

Her advice to other women?

“As scary as the market can be, you should see it as an opportunity,” Jones said.

Women feel more empowered

Financial planner Randa Hoffman of Radiant Wealth Planning said she’s seen a shift in how her female clients approach investing. Hoffman says women are now asking more questions and want to understand why she recommends certain funds over others.

I feel like now, more than ever, the old baby-boomer mentality of the guy takes care of the money is shifting.

“I feel like now, more than ever, the old baby-boomer mentality of ‘the guy takes care of the money’ is shifting,” Hoffman said.

Financial companies are targeting women

The financial services industry has realized that women are a huge target market, and have increased their efforts to market towards women. Ellevest is a robo advisor specifically targeted to women and their unique financial situations, for instance.

31-year-old Amanda Castroverde, a Marketing Manager at Vrbo who also pens the blog A Second Coat and is based in Austin has read Ellevest’s blog regularly for a couple of years and credits it with encouraging her to learn more.

The stock market always seemed like it wasn’t made for me,” she said. It seemed like it was for rich white guys.

“The stock market always seemed like it wasn’t made for me,” she said. “It seemed like it was for rich white guys. The Ellevest blog is the reason I decided I was worth enough to invest.”

Where Women Can Learn More about Investing

If you’re interested in investing but don’t know where to begin, there are lots of resources to help you start. Former investment manager Amanda Holden of the Dumpster Dog Blog offers an investing basics course, “Invested Development” aimed at beginners.

Perez hosts monthly investing seminars called, “How to Not Die Broke: An Investing 101 Breakdown” for $25 a session.

Books like “Broke Millennial Takes On Investing: A Beginner’s Guide to Leveling Up Your Money” by Erin Lowry and “Clever Girl Finance: Learn How Investing Works, Grow Your Money” by Bola Sokunbi are also easy reads.

If you want more one-on-one help, you can always book a session with a financial planner. You can find a fee-only financial planner through the Garrett Network or the XY Planning Network. Both of these groups compile lists of reputable planners.

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Feature Illustration: Laura Caseley For The Money Manual