After getting furloughed by American Airlines, and watching her side gig leading trips outside of the US evaporate overnight at the start of the pandemic, Brittany Floyd felt unsettled. Just prior to the global spread of Covid-19, she had gotten out of a serious relationship that had provided her a comfortable lifestyle. Having lived across every aspect of the income scale—she grew up in a low-income household, where her mother worked as a custodian and her father as a construction worker—she had no intention of going back to a life of financial struggle. “I just can’t do this again,” she says.
The pandemic had Floyd thinking about wanting to be financially independent and not having all her money tied up in one sector of the economy. “And it scared me because I’ve never felt so out of control of my finances,” she says.
Floyd, 30, started reading forums, books, and social media posts about how she could diversify her income. That led her to download Robinhood, the popular brokerage app, where she could put to work a small amount of money that she “wouldn’t miss much, but enough that had an impact.” She said she invested in stocks that aligned with her interests, such as alternative energy companies and Pinterest. More recently, she’s been thinking of about doing more long-term investing in index funds at Fidelity.
The pandemic has disproportionately hurt women hard financially in regard to everything from unemployment to childcare duties. But one other phenomenon might be happening: More women are now prioritizing their finances.
In 2020, the variety of female customers at Fidelity rose 9%, outpacing the 7% increase in male customers. Fidelity now works with more than 14.5 million women across the US, both through workplace and retail investing. Meanwhile, Robinhood saw the number of women on its platform quadruple in February versus the same month last year and now make up nearly 30% of its customers.
Investors in the US opened more than 10 million new brokerage accounts final year, which JMP Securities estimates was a record, as the Wall Street Journal has reported. That was in part due to much of the brokerage industry shifting to commission-free trading in 2019, and to the pandemic, which led to millions of new investors finding themselves stuck at home with extra time to learn more about the markets.
Federal Reserve data shows that stock ownership has gotten younger and more diverse. The fact that many investors keep multiple accounts makes it challenging to reach broad-brush conclusions about how people are investing by gender, income, or occupations, says Christine Benz, director of personal finance at financial services agency Morningstar. But experts say that the pandemic has pushed a lot of women to more actively manage their finances.
“That really just set off an accelerated engagement from women, to make sure that they got their emergency savings in order,” says Lorna Kapusta, who leads Fidelity’s women investors team. In the beginning of the pandemic, she says, people were making calls to Fidelity to ensure they had enough in emergency savings in case of job loss, as well as to make sure their investing was on track.
Women’s earnings were growing prior to the pandemic
So why has it taken so long for women to invest in great numbers?
Part of it might be explained by income, says Morningstar’s Benz. Women tend to have lower lifetime earnings than men, so they frequently have less retirement money to invest than men do. But lately, women in the US have reached parity in educational attainment—and though the earnings gap persists, income levels for women were picking up prior to the pandemic, she says.
The pandemic: A difficult dynamic for women
It’s somewhat counterintuitive that investing by women would pick up in a pandemic—one that has devastated sectors with high concentrations of female service workers (think retail, hotels, and restaurants) and has led many to leave the workforce to care for children home from school or medically vulnerable family members.
“The whole dynamic has been difficult for everyone, but it’s been especially difficult for women,” says Morningstar’s Benz. “If you’re working less, you would probably have fewer discretionary assets to place to work in the market.”
But when you group women into income tiers and compare them to men who earn the same amount, “basically all of that falls away,” Benz says. For example, among women and men who earn between $75,000 and $100,000, you’ll find similar retirement contributions and equity holdings. In other words, the more affluent women get, the more likely they’ll put more money to work in the markets.
The allure of no-fee trading extends to women
The brokerage industry, too, has been reducing barriers to investing that used to keep more people sidelined. Women of color, in particular, have taken advantage of this, according to Angela Fontes, director of the behavioral and economic analysis and decision-making program at social research firm NORC at the University of Chicago. Her research found that 17% of the brokerage accounts opened by women in 2020 were opened by Black ladies, while 11% of accounts opened by men were opened by Black men.
She says that the number one driver of new accounts last year was the ability to invest now with a smaller amount of money. “It used to be that you needed at least $10,000 to even sort of entertain becoming an investor,” she says.
Financial advice is getting more accessible
Valeria C. worked as a hospitality manager in London before being furloughed last April. Looking to save money, she went back to Rome to stay with her family, and used what she saved to invest in “trendy” stocks like Zoom, as well GameStop and AMC, she says.
Valeria, 28, is the only person in her family who invests in stocks. She says the rest of her family is quite conservative with money, and that it can be “a little bit lonely” when there’s no one to discuss the markets with.
Stuck at home with not much to do, she would scroll through Instagram to help her to stay up to date on financial advice, and to find other women interested in — discovering accounts like MsDowJones—who she finds “blunt and honest.”
It’s a “very interactive kind of learning, ” she notes.
Experts point to financial advice getting more accessible in recent years, whether in the form of educational content from the brokerage firms or popular accounts on social media, where influencers like Patricia Bright and MrsDowJones post savvy content catering particularly to millennial women.
Fidelity’s Kapusta says that the calls in the beginning of the pandemic spurred the idea of a weekly Zoom discussion called Women Talk Money, where each week, Fidelity’s hosts focus on a questions asked by viewers, ranging from investing for retirement to paying for college. The event series was supposed to run for four to six weeks but they are still happening today.
In March, Valeria headed back to London to start a new job. Only this time she’s armed with knowledge about the markets and ideas about where to invest her earnings. “To be honest, it was a very fun experience,” she says of her investing education. “It is a very fun expertise because I’m still in it.“