Stock Market Volatility: How Women Investors Handle Downturns

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Women aren’t going to let a little something like stock market volatility scare them.

Seventy-five percent of women who are actively investing for retirement say they’ve continued their contributions despite market volatility, according to a new survey from Ellevest, an investment platform for women. That’s compared to just two-thirds of men who’ve kept making steady retirement contributions during the stock market downturn.

The survey, which included nearly 2,500 people aged 18 and older and was conducted in August, is in line with other reports that show women tend to be better at keeping their cool and maintaining a disciplined, hands-off approach to investing.

For example, last year Vanguard issued a report on its retirement plan data showing that women traded in their accounts about 40% less frequently than men. It’s a strategy that pays off: A 2021 study from Fidelity Investments found that over the last 10 years, women on average have outperformed their male counterparts by 40 basis points or 0.4%. That might seem small, but it can add up over time.

Investors have endured a tons of volatility this year. After kicking off 2022 at a record high, the S&P 500 fell into a bear market in June. While the index, which is commonly used as a benchmark to measure how stocks are doing overall, experienced a bump over the summer, it’s once again plummeted and is currently down around 23% for the year.

The pain may not be over. The Federal Reserve hiked interest rates by three-quarters of a percentage point this week for the third time in a row. Interest rate hikes are intended to get spiraling inflation under control, but they also tend to crimp the price of financial assets like stocks and cryptocurrency. Goldman Sachs just cut its year-end target for the S&P 500 by about 16%.

But for the most part women are sticking to their long-term plans despite the market’s ups and downs — a strategy financial advisors say is the right way to go.

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How men and women react to stock market volatility

The fact that so many women who are investing for their retirement have continued their contributions despite the rollercoaster-like moves in the stock market is really good news. Even if financial markets look rocky now, compound interest — the money that accumulates from an initial investment over time — all but ensures that investing now will pay off in the long run.

Earlier this year, Fidelity wrote that $10,000 invested at the time that grows at 9% per year without any additional contributions would be worth around $15,000 in five years, $24,000 in 10 years, $56,000 in 20 years and $133,000 in 30 years. (Wondering where the 9% increase comes from? It’s the roughly the historical average return of the S&P 500.)

Meanwhile, 77% of women said they haven’t yanked money out of the market in the last year, according to Ellevest. That’s slightly higher than the 72% of men who said the same.

It’s not all good news for women. They’re still half as likely as men to invest, with 36% of women saying they currently are investing versus 63% of men. The new survey also shows that only 38% of women reported feeling concerned about market volatility versus 58% of men. But, of course, if fewer women are investing it makes sense that women overall are less likely to be worried about volatility.

The main takeaway is that women who invest appear to be more likely to practice the strategies that have proven successful for long-term success with their portfolios. These strategies include not reacting to market news and keeping money invested even when it’s scary.

The latter is especially important: The stock market’s best days tend to happen right around its worst days, which means if you withdraw when you’re anxious, it’s possible you’ll miss out on the upswings.