There is a significant gender confidence gap when it comes to South Africans’ attitudes towards investing.

In 2021 Fidelity, a large asset manager in the US, ran a nationwide survey to understand women’s attitudes towards investing and their investment behaviour.

The survey found that while there had been an increase in the number of women who invest, the trend remained that women are less likely than men to invest and have less confidence when it comes to investing.

In partnership with Satrix, an index-tracking and exchange-traded fund (ETF) provider, I ran a social media survey to see if there was a similar trend in South Africa.

We assumed that people who would follow a personal finance writer would tend to be more informed about investing, however, we still saw discrepancies between men and women, specifically around people’s confidence in their investment knowledge.

When asked “How would you rate your current knowledge about investing?” 42% of male respondents said they were very knowledgeable, whereas only 15% of female respondents claimed to be very knowledgeable.

This bias was again noted when asked “What factors would contribute to any hesitation to start investing?” Only 9% of male respondents said a lack of knowledge contributes to their hesitation, while nearly a third of women cited that a lack of knowledge made them hesitant to invest.

This large discrepancy in both knowledge and confidence was also identified in the American study. Fidelity also included a financial literacy questionnaire and found that although women did on average have less financial knowledge than men, this still did not account for the large discrepancy in the perception of their knowledge.

Addressing the gender confidence gap

In other words, women under-estimate their knowledge, which in turn affects their confidence when it comes to investing.

Men on the other hand tend to over-estimate  their financial knowledge and therefore tend to be overconfident. This could also explain why men are more comfortable with higher-risk assets such as crypto.

Thembeka Khumalo, senior client experience manager at Satrix comments that while it is pleasing to see the growing investment appetite among women, the industry still needs to address the gender confidence gap when it comes to investing.

“It has been shown time and again in numerous studies that women make better investors. This is an empowering truth which can be used to boost the confidence of women when it comes to investing,” says Khumalo.

Fidelity also analysed its client base of over five million customers and found that over the last ten years, women outperformed their male counterparts by 40 basis points. This suggests that either financial knowledge has less to do with financial outcomes or that overconfidence could be a negative factor when it comes to investing.

In my social media survey, both men and women understood the difference between investing and saving, although women indicated they would like more knowledge.

Saving gave women a stronger sense of control over their money and future than indicated by men. However, when it came to investing, 19% of women said investing made them feel anxious and uncertain about what is happening to their money, compared to 15% for men.

Khumalo says, “Overconfidence is a major emotional bias which can have a negative impact on one’s investment success. One of the lessons that can be learnt from Morgan Housel’s book, “The Psychology of Money”, is that doing well with money isn’t necessarily about what you know, but more about how you behave and your ability to adopt a long-term mindset among other things.

“Women make over 70% of household buying decisions and therefore also tend to feel a greater sense of responsibility to spend their money responsibly, and hence investing leads to anxiety. I believe that events like the JSE’s “She Invests” play a crucial role in educating women about investing and help to boost their confidence. Low-cost investment platforms have also played a major role in breaking down the barriers that deter women from investing.”

When it came to questions about how they save and invest, women were more likely to save in a traditional savings account than men and a similar trend was found with property.  Anecdotally, I find women tend to prefer investing in property than shares and this was confirmed in the survey with 43% of women stating that they invest in property compared to 33% for men. The most popular investment for men was a share portfolio at 45% of respondents.

“This is not surprising given that men have a higher risk appetite in comparison to women. And with women generally being known to be more risk averse, it is plausible that they would prefer to invest in traditional savings accounts or in property, both of which are seen as safer investment options,” says Khumalo.

What this tells us is that financial knowledge is important and that the more knowledge a person has, the more likely they will be to invest. However, it also suggests that women need to trust their knowledge more and start taking some risks in order to grow their wealth.

This article first appeared in City Press.