Behavioral gender differences in financial investing and their consequences for women in old age
Women’s different investing behavior leads to lower wealth accumulation over the years, which widens the financial gender gap even more. This bachelor thesis provides an overview over three gender differences in investing and its financial consequences for women at retirement.
Lea Syfrig, 2023
Bachelor Thesis, confidential
Betreuende Dozierende: Kevin Stringer
Keywords: investing, gender, retirement
Due to changes in the economy and Swiss pension challenges, it's vital to invest beyond legal requirements for sufficient assets in old age. Especially for women with longer life expectancy, lower salaries etc., capital investments can narrow the financial gender gap and secure their retirement. However, women's investing behavior differs from men's, leading to less wealth accumulation. My paper explores three gender differences in investing: risk tolerance, confidence, and financial literacy, while focusing on financial literacy’s impact on investment rates and risk tolerance.
First, I conducted a review of existing literature to deepen my understanding of the subject and to form relevant research questions. Subsequently, I acquired anonymized data about the portfolio allocation from both female customers and client advisors from the client bank. Customer advisors were defined as having greater financial literacy than clients, as their daily task is to provide guidance on matters such as financing, investing etc. To find out whether increased financial literacy has an impact on the investment levels and risk tolerance, both datasets were compared with each other.
According to the findings, increased financial literacy was associated with a higher investment rate and a greater risk tolerance. When analyzing the investment rates and risk profiles of both groups, it becomes evident that female client advisors would have gained more than four times the profit of female customers since they invested more of their wealth into the capital market and have chosen a riskier investment strategy with higher historical performance. The findings highlight the importance for the client bank to prioritize client education. A targeted campaign aimed at women can be launched to enhance their awareness regarding the specific challenges of the Swiss retirement system for women and the importance of investing. This educational effort has the potential to boost financial understanding and encourage greater participation in investments. Consequently, the bank benefits from increased income generated through trading and investment transactions. Moreover, fostering this enhanced financial literacy can strengthen trust among customers, leading to the establishment of long-term relationships with the bank.
Studiengang: Business Administration International Management (Bachelor)
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