They've earned it. They've saved it. And there it sits -- a big pile of money in their savings accounts.
At least that was the case with a handful of high-earning women I interviewed. Single, cohabitating, East Coast, West Coast... and they all had one thing in common: They were sitting on sizable nest eggs that were earning a paltry 1% or so. And for various reasons -- ranging from fear to self-described "paralysis" -- they were reluctant to invest it in the stock market.
It's a disconcerting phenomenon that I've dubbed the "sit-it-out syndrome." If this were a Jane Austen novel, my fair heroines would be perched on the sidelines, clutching their reticules, while the ball went on without them. Ironically, in 2013, they're VPs at ad agencies, marketing execs at Fortune 500 companies and middle-school teachers who've perfected the study of saving.
In fact, they're part of the nearly one in four American women who are bringing home the bigger paycheck, but according to what they told me -- and what recent research backs up -- once they amass a nice sum of money, they don't know quite what to do next.
Why Smart Women Won't Invest
Is the sit-it-out syndrome a hangover from the Great Recession, or did we all watch too much "Mad Men" and internalize retro relationship roles?
It may be a little bit of both: A recent Fidelity study that we'll explore shows that fewer women than ever feel confident about wielding control of their own purse strings.
"I've got $75,000 sitting in a savings account," says Diane England*, 38, a VP at an advertising agency in Manhattan. "I know I could get more return investing, but I don't know where to begin. I am frozen by my lack of knowledge and my insecurity that, at my age and income bracket, I should have a clue."
England, who is single, isn't saving for anything in particular, except maybe a down payment on a future beach house. "But that's not really why I hesitate," she says. "It's more out of insecurity and feeling overwhelmed."
Some woman say that not getting involved in the stock market actually provides them with more peace of mind. Take Sejal Patel*, a senior marketing executive at a blue chip pharmaceutical company who just turned 40.
"I've always maxed out my 401(k), but that's about it," Patel says. "I have a quarter of a million dollars in a savings account, earning the proverbial 1%. My parents think I'm ridiculous for sitting on this amount of cash, having done nothing with it."
In fact, after a decade of nagging, she finally gave her dad the password to her old 401(k) -- where, she says, he was aghast to find another $85,000 sitting in an IRA, uninvested. "They asked, at a minimum, if I would at least do something with that," she says. "And literally two weeks ago, I agreed."
While, Patel, who has no dependents, is arguably part of the 1%, she views keeping her nest egg earning 1% as a way to protect against a seriously rainy day. "I see other mostly young, single women who either don't have anyone advising them or, like me, feel scared," she explains. "We live in uncertain times of re-orgs, collapsing banks, and the highest number of unemployed peers I thought I would ever see -- you just never know where you'll be, and you need a good plan B."
And why is she against potentially earning more on a portion of her cushion? In a word: fear. "The idea that I will somehow lose all of my savings at a time when I really need it," she says. "As a single person, you have no second income to fall back on, and who wants to be 40 and ask their parents for a loan?"
Young Women, Married Women -- Why They're All Equally Investment-Averse
It seems that it's not just single women who pale at the thought of managing their own portfolios. Every two years, Fidelity publishes the results of its "Couples Retirement Study." This year's analysis, released in September 2013, showed that while women are growing increasingly comfortable handling day-to-day financial decisions, more women than ever are handing the reins to their partners when it comes to investing.
Disconcertingly, the younger the respondent, the more likely she was to feel unqualified to manage her own investments. "We did see young women playing a less active role in retirement decisions," says Lauren Brouhard, senior vice president of Retirement at Fidelity Investments.
While one in four Boomer women identified themselves as the primary financial decision-maker in a relationship, she says, only 12% of Gen Y did. The majority of women in the study also said that they had more confidence in a spouse to assume control of the finances, and they most frequently chalked it up to the fact that "he's better with numbers."
"At the end of the day, it boils down to a crisis of confidence for women," Brouhard says. "They're more likely than men to doubt their ability to handle the responsibility for their financial futures. We think it's a little ironic that women's interest in financial planning is still low given their growing earning potential."
And Brouhard notes, it's especially important for women to be savvy because, on average, they tend to outlive male spouses by at least five years -- and there's that one in two odds of getting divorced. "We know that there's a really high likelihood that women will need to take control of their finances at some point," she says.
RELATED: Why Retirement Is Harder for Women
Of course, not all women fit the sit-it-out profile. And shying away from investing doesn't always equate with a lack of interest. Rather, among these would-be female investors, there's widespread confusion about just how to get started.
Take Jenna Megalizzi, a 36-year-old seventh-grade science teacher based in Berkeley, Calif.
"We were three couples, sitting around a lake on Labor Day weekend, and we started talking about investing," Megalizzi recalls. "I was saying, 'I have about five friends who are lawyers, but all I want is a friend who's a financial planner because I have no understanding of how to wisely invest my money.' I haven't invested because I don't understand the system, and I'm concerned about risk. I want someone to take me by the hand and guide me."
And her boyfriend, she adds, "is even more clueless than I am."
To Invest or Not to Invest?
So, should everyone have his or her money in the market? Not necessarily, says Brandie Farnam, a certified financial planner™ with LearnVest Planning Services, who adds that there are certain questions you need to ask yourself before deciding whether you're ready to take any of your savings for a whirl.
"What I generally tell clients is that before you consider investing, make sure you have a fully-funded six months of emergency savings, and that you are maxing out your retirement accounts," Farnam says. And it goes without saying that you should first pay down any high-interest credit card debt too.
The other factor to consider? Your time horizon -- i.e., when you expect that you'll want the money. "With a goal like retirement, you may have 30-plus years until you need your money back," she explains. "If you want to buy a home in five years or less, you may not want to invest the money for that goal."
But, she says, if you've checked all of the boxes above, you may want to consider investing as a means of growing your money. "The problem with earning 1% is that inflation grows at 3%," she says. "Your money needs to grow faster than inflation. Generally speaking, markets have averaged 7% per year. At that rate, every 10 years, your account should be doubling."
As for the fear that plagues so many sit-it-outers, Farnam says it's common -- but usually unfounded. "It's a matter of taking a calculated risk, and finding that balance of being able to sleep at night," she says. "If you put your money in one hot stock, you stand a very good chance of losing it. But if you find a moderate mix of investments that's appropriate for your time horizon, you can say, 'OK, I'm going to put this money to work.' "
Attorney Heather Victor*, 44, has been working with a financial planner since she landed her "first adult job," making $28,000. "It was the best move I made," Victor says. "Since then, I've always met with a financial planner on a quarterly basis."
And even though her planners have come and gone, Victor has learned how to build a portfolio that she's proud of. "Sometimes the planner will throw out terms that mean nothing to me. It's like when a sommelier goes through a detailed description of a fancy wine, and I say, 'Can you just give me a red wine that doesn't taste crappy?' " she explains. "I found that the best thing to do was to explain what my goals were, and where I wanted to invest -- and then have the planner explain the terms to me simply."
Indeed, Fidelity's research shows that women who face their fears about getting involved in the market tend to be better investors than men. "They're better planners, they tend to stay the course once invested, and they tend to take on less risk, so there's lots of evidence that they're doing very well," says Brouhard. "We want to see that confidence spread."
*Indicates name has been changed.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment advice. Please consult a financial adviser for advice specific to your financial situation. The people quoted in this piece are not clients of LearnVest Planning Services. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other's products, services or policies.