The Risk Gap: How Gender Influences Risk Tolerance and Investment Decisions
Kaitlyn Hannan, Jones College Prep, Senior, Spring 2026
When it comes to financial decisions, the gender divide in risk tolerance reveals not only a difference in behavior but also potential barriers to future investments. Risk tolerance is the level of uncertainty an individual is willing to accept when investing and making decisions. Each person has a different level of risk tolerance, which influences their risk behavior. However, a notable pattern in risk tolerance is gender-based differences in economic risk-taking. According to data from the Survey of Consumer Finances, “A significantly greater proportion of men in the sample reported high risk tolerance (20.3%) or some risk tolerance (56.3%) in comparison with women (high = 11.4%; some = 39.6%)” (Fisher & Yao, 2017). Women are often found to be less risk-tolerant than men, although the reasons for this difference remain a matter of debate. Nonetheless, this gender-related difference can have significant long-term implications.
Specifically, risk tolerance can greatly influence retirement investment decisions, as an individual’s risk behavior can determine whether they adopt a growth-oriented portfolio or a conservative one. A survey conducted by the Federal Reserve Bank of Philadelphia found, “Compared with only 31 percent of women, 49 percent of men are comfortable making retirement account [investment] decisions” (Fernandez & Tranfaglia, 2020). Finance author Ann Logue corroborates this, stating “women may not be taking appropriate risks, especially early in their careers, with their retirement funds.” Thus, gender-based differences in risk behavior can lead to unprecedented future financial consequences in lifetime compound investment returns.
However, differences in risk tolerance between men and women may be mitigated through financial literacy education. As Erin Hueffner, a woman confident in her financial investments, states, “I think one of the most important things that can happen is early financial literacy.” Initiatives to promote early education on financial products and understanding their expected returns have the potential to empower women to make optimal risk-adjusted financial decisions.
While gender-based differences in risk tolerance can have far-reaching financial implications, these differences do not have to persist indefinitely. By addressing the factors that may limit women’s risk tolerance, we can empower them with greater financial confidence, better prepare them for a secure retirement, and promote true financial equality.
Statistic Links
Interviewees
Annie Logue - Financial Expert, Author, CFA
Erin Hueffner - Civilian
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