Women Aren’t Bad at Taking Risks—The System Is Just Rigged

Investing has been portrayed as a high-stakes macho game—a narrative that is deeply misleading .

In the second half of the 20th century, women made significant progress in closing the gender pay gap. But in the last two decades, progress has stalled. A Pew Research Center survey revealed people’s reasoning for that trend: “half of U.S. adults point to women being treated differently by employers.”

But the gender gap doesn’t end with wages. As the authors of one 2024 study point out, “Women are less likely to participate in the stock market than men….The price of non-participation (and under-participation) in the stock market over long periods of time is staggering, placing women at significant financial disadvantage compared to men.”

What’s at issue? The problem lies in how investing has been portrayed as a high-stakes macho game—a narrative that is deeply misleading.

First of all, research shows women are more likely to fixate on potential negative outcomes, and for good reason. Divorce, for example, disproportionately affects women’s financial stability. On average, a woman’s household income drops by 41 percent following a divorce, compared to a 23 percent decrease for a man.

But a healthy respect for risk is actually an asset in investing, especially when it comes to due diligence—that is, reviewing available information to make an informed decision. Studies from Fidelity, Hargreaves Lansdown, and Warwick Business School all confirm that when women invest, their portfolios outperform men’s.

The challenge, then, isn’t pushing women to take more risk; it’s helping them recognize that investing is a field they’re already equipped to handle.

This recognition could lead more women to higher-paying jobs traditionally dominated by men, such as finance and investing, and thereby help narrow the gender pay gap.

A History of Exclusion

While it is a lesser-known disparity, the gender investing gap persists because women earn less, are less likely to be promoted, shoulder more financial responsibilities, and still face challenges rooted in a history of systemic exclusion. For instance, until the Equal Credit Opportunity Act of 1974, single women in the United States often needed a male cosigner to open a bank account, get a credit card, or take out loans.

Interestingly, as the Stanford Law Review notes, in 1956, some 18 years before that landmark act, the New York Stock Exchange (NYSE) published findings that showed that women were the majority of individual shareholders across the United States.

Women didn’t just have access to investing—they actively leveraged its power. In an era where they were largely excluded from politics, law, and even their own finances, shareholder governance provided a rare avenue for influence. Unfortunately, that power was short-lived.

As institutional investing took hold, women quickly lost influence. Pension funds expanded, and financial institutions, mostly led by men, pooled vast sums of money that overshadowed individual shareholders. The Stanford Law Review highlights that this was intentional; female shareholders were “widely regarded as unsuited to participate in business management.” In other words, their exclusion was deliberate and systemic.

To be clear, the opportunity for women to invest wasn’t felt equally. Racial discrimination severely disadvantaged non-White American women. The 1948 Census reported that the median household income for non-White families was half that of White families.

Today, this gap—the racial wealth gap—persists, with the Q4 2024 Bureau of Labor Statistics earnings report showing significant wage disparities across racial communities. Women still are typically paid 75 cents for every dollar paid to men. With Black women, this number is even lower at 64 cents, and for Latinas, it is still lower, 51 cents. Nearly 50 percent of women lack an emergency fund, compared to 39 percent of men. While these numbers reduce the income that women can invest in the stock market with, the problem runs deeper than the numbers.

The Cultural Narrative

According to research from eToro, a global investing app, the gender investing gap is even further exacerbated by pop culture. Movies and TV shows largely depict men as finance experts, with women relegated to the sidelines as supporting characters—wives, partners, administrative assistants. When women are portrayed in finance roles, they’re often either (hyper)sexualized or exhibit exaggerated ‘alpha male’ characteristics.

The eToro report also found that most female finance leads were “power dressers,” typically wearing heels—presumably to signify dominance or authority. Meanwhile, male characters had a far wider range of portrayals and more casual apparel, suggesting that investing comes to them more naturally. The media’s bias sends a subtle but powerful message: Investing is a man’s world, and women don’t belong (unless they conform to harmful stereotypes).

Financial institutions are also complicit. eToro itself, despite publishing a report on gender inequities in finance, has sponsored dozens of professional men’s soccer leagues worldwide. While soccer is globally popular, its fanbase skews male, with 63 percent of FIFA World Cup viewers identifying as men. (Though to eToro’s credit, their social media has increased content aimed at narrowing the gender investing gap since they published their recent report.)

This is far from a one-off. Research has also found that day-trading advertisements on social media often promise “expensive cars, Rolex watches…and attractive women,” each of which reinforces a world designed for, and by, the stereotypical heteronormative man.

But the irony is that women statistically make better investors. They tend to trade less frequently, hold more diverse portfolios, and focus on long-term stability—all behaviors linked to higher returns, explaining how they outperform men by an average of 1.8 percentage points a year, according to one study authored by a British behavioral scientist. In 2023, a BlackRock report found that women-run hedge funds outperformed the average fund by 10.5 percent over 16 years. And in a survey of over 350 startups, women-owned businesses delivered twice as much per dollar invested.

More Risk, Less Reward

For decades, the financial industry has touted high-risk “aggressive portfolios.” This language can alienate women, who face negative consequences for exhibiting aggressive behaviors due to societal stereotypes. Yet, as the data suggest, an aggressive investing strategy isn’t necessarily a good one.

Consistent, thoughtful investing can yield greater financial security over time. Women’s investment habits align with this approach, making their strategies more effective over a lifetime, though many women don’t realize this. Sadly, 73 percent of women don’t feel comfortable investing because of a perceived lack of knowledge. Over half (52 percent) cite having insufficient understanding of online investment and trading.

Investing with Intent

Women’s thoughtful, more conservative long-term investment strategies not only lead to better results for themselves—they also have better outcomes for our planet. A survey by RBC Wealth Management found that 74 percent of women want to increase their share of Environmental, Social, and Governance (ESG) investments in their portfolios. Women are twice as likely as men to say it’s important that their investments integrate ESG factors into their policies and decisions.

The data paint a similar picture now as they did back in mid-century when female shareholders were the majority. Take Louise de Koven Bowen, a shareholder who was notorious for advocating for worker safety and fair wages in the early 20th century. Her influence as a shareholder activist helped drive substantial social justice reforms.

This commitment to responsible investing underscores an important truth: Women investors don’t avoid risk—they just evaluate it differently, just as ESG investing does not avoid risk but rather uses ESG factors to assess risk. The greater risk lies in doing nothing at all and refusing to invest in our planet, our people, and a sustainable future.

Empowering the Next Generation

Closing the gender investing gap starts with financial education. Unfortunately, research shows that gender stereotypes learned from a young age significantly shape career choices—often steering women away from the finance and investment industry and toward lower-paying jobs.

That’s where nonprofits like Girls Who Invest, which focuses on bridging the gap of unequal representation in investing firms, come into play. Their mission is to have 30 percent of the world’s investable capital managed by women and gender nonbinary individuals by 2030. Their approach is to nurture a pipeline of talented young people who want to enter the industry, as investment firms claim they don’t receive enough resumes from these groups.

Invest in Girls, another nonprofit, brings financial literacy directly into classrooms, helping young women understand personal finance and careers in finance. Of the 5,000 students they’ve educated for free, 75 percent are students of color, and 40 percent are from low-income families. Their graduates report a 98 percent increase in their understanding of finance careers—an encouraging step toward closing the gender investing gap.

Play Like a Girl, a nonprofit focused on inspiring young women to pursue careers in science, technology, engineering, or mathematics (STEM), shows the power of mentoring in narrowing these gaps. One study found that 57 percent of women say a relatable role model is crucial to career success. Programs like these are essential for dismantling the stereotypes that keep women out of high-paying, high-impact fields like finance.

Programs that teach women about investing are also critical. Invest for Better does exactly that, offering financial education on how to grow one’s wealth while also investing in sustainability and social justice.

Changing the Narrative

To change the narrative around women and investing, the media needs to step up. Finance-related stories must feature women in diverse, relatable roles—not just stylized, cutthroat figures. Women need to see themselves in all their forms as investors: cautious, strategic, ambitious, and community-driven.

Women have long been great investors. The problem isn’t a lack of skill or risk appetite but the system, stereotypes, and stories that have rigged the game against them. There is a real and significant risk in maintaining the status quo.

By breaking down systemic barriers, expanding financial education, and changing the media narrative, we can help close the gender investing gap for good. Women don’t need to learn how to take risks—they need a system that stops punishing them for doing so.