Women and risk

Women are accumulating less funds in their lifetime and many are retiring financially insecure, as compared to their male counterparts. A major contributor to this is low levels of financial literacy which has a negative impact risk perception. Risk perception refers to how an individual makes a personal judgement about the likelihood of a negative outcome.

This extract from The Influence of financial literacy and risk perception on investment on choice of investment by Aren et al, confirms this link. ‘In this research, we investigate variables which are affecting investment preferences of individual investors. Personality trait is not an important variable, but on the other hand our evidence shows that level of financial literacy and risk perception are important. Besides, risk perception is also affected by financial literacy and gender… ‘. An exaggerated and ill-informed perception of risk leads to poor investment choices with negative long-term effects.

The latest S&P Global Financial literacy survey found that 35% of the male population surveyed is financially literate compared to 30% of the female sample. Women’s lack of financial knowledge is an impediment to their financial success. If we really want to have an impact on the financial lives of women, one of the first and most important steps to be taken would be in the direction of financial literacy.

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