(MONEY Magazine) – It's hard to believe, but less than a generation ago both sexes considered it somehow unfeminine for a woman to be smart about money. No longer. "The new attitude is, it's not only okay for women to actively manage their own money, it's almost dopey not to," says Esther M. Berger, a financial planner with PaineWebber in Beverly Hills and author of Money Smart: Secrets Women Need to Know About Money (Simon & Schuster, $22). Or as Lafayette, Calif. financial planner Lynn Ballou puts it: "Smart women are out of the closet. You can be smart about money and proud of it."

This 25-page special report is intended to make you even smarter. In it, you'll learn why it's essential to determine what you're worth--and what your spouse is worth, if you're married--and how to figure that out (page 156); moves to make now to ensure you'll be worry-free in retirement (page 166); and where to invest your money for superior growth (page 178). It's rare that MONEY gets to write about sex, but we give you that too: On page 149, columnist Candace Bushnell tells why women, unlike men, will never think more about sex than money. Finally, bestselling author Gail Sheehy explains why so many successful women live in fear of becoming a bag lady (page 176).

Not to be Pollyanna-ish: Even the savviest women today face some unique challenges in managing their money. After all, you can't earn, on average, 25% less than men do and not have a few obstacles to overcome. In particular, women still invest too little, too late--in large part because they generally have less money to put away in the first place. And they tend to have smaller pensions--if they have any at all--and fewer retirement benefits than men do because of their tendency to pop in and out of the work force to raise a family and care for an aging relative.

But the single-minded, sometimes hyperbolic focus on such problems masks the enormous progress that women have made over the past few years. Interviews with more than two dozen financial professionals, researchers, academics and individual investors lead MONEY to the following conclusions:

--The number of women who are learning the investment ropes and taking control of their finances is growing exponentially. "Ten years ago, we put all of our energy into just surviving in the workplace," says Jessica Bibliowicz, who runs Smith Barney's $75 billion mutual fund operations. "Now we're ready to take on new challenges. Learning how to manage the money we're earning is the natural next step."

--Women are investing much more assertively than they have in the past. National studies of both 401(k) investors and mutual fund holders show that women are shifting their assets out of savings accounts that simply preserve their principal and into growth-oriented investments like individual stocks and equity mutual funds. Roughly equal proportions of men (74%) and women (71%) fundholders now invest in stock funds, according to the Investment Company Institute, the mutual fund trade organization. And both sexes allocate nearly equal percentages of their portfolios to equities: 47% for men, 46% for women.

--These women investors are producing results that are every bit as good as men's--and sometimes even better. The equality should come as no surprise. But in case you doubt the other part, chew (or stew) on this: Since they began, female-only investment clubs tracked by the National Association of Investors Corporation (NAIC), the investment club association, have earned a 21.3% average annual return, compared with 15% for men-only groups. "The gender gap in investing is no longer between men and women," says Ronna Lichtenberg, a senior vice president at Prudential Securities who heads the firm's education and marketing efforts for women. Instead, she says, "it's between women's ability and their confidence. Women don't yet realize just how knowledgeable they've become."

Even that gap is closing. Consider the investment odyssey of Debra Lee, 42, president and chief operating officer of Black Entertainment Television. A Harvard-educated lawyer, Lee started investing about 10 years ago, shortly after she left a corporate law firm in Washington, D.C. to join BET as general counsel. "For the first time in my career, I had extra money," she says. "I felt like I could finally afford to invest." Her first step was to join a women's investment club. "It was an easy way to learn because it didn't take a lot of commitment in either time or money," she says, "and I had the security blanket of picking stocks with 19 other women." The results have been exceptional: The club's portfolio has gained about 24% a year since its inception in 1987. That's 10 percentage points better than the S&P 500.

But it wasn't until about three years ago that Lee began investing in earnest outside of the club. (She and husband Randall Coleman, 43, a fellow lawyer, agreed to keep all financial accounts separate when they married in 1985.) That's when Lee, motivated by the success of the club and the birth of her children Quinn, now 7, and Ava, 3, began beefing up contributions to her 401(k) and investing aggressively in stocks in her own brokerage account. "I'm more of a risk-taker than I was when I first started," says Lee. "My successes have given me the confidence to be more adventurous." The strategy has certainly paid off. Lee's brokerage account gained 42.5% last year, thanks to such smart picks as Hewlett-Packard (up 68%) and America Online (up 168%). Combined with her 401(k) account, that gives her a portfolio currently worth well over $200,000.

It doesn't take an M.B.A. or even a degree in social psychology to figure out why women are taking a more active role in managing their money. Many of them, at long last, have some real money to invest. About 57.5 million women are now working, 42 million of them full time. That's 56% of the adult female population, compared with just 32% who were working in 1950. And in an era of generally stagnating wages, working women have been the only true standouts. According to a new study from the Economic Policy Institute, a Washington, D.C. think tank, working women on average saw their earnings rise 4% to $8.92 an hour from 1979 to 1995, after adjusting for inflation, while wages for men fell nearly 15% to $11.62 an hour.

Women with college degrees fared even better, with a 19.5% pay hike, while college-educated men barely stayed afloat with a razor-thin 0.6% increase in earnings. Though the pace of progress has slowed over the past several years, female college graduates now earn $14.84 an hour, to a man's $19.55 an hour.

As a result, the percentage of household income earned by women has been growing steadily over the past 15 years. For example, fully 48% of working wives now provide 50% or more of their family's income. And get this: The average married female executive at Fortune 1,000 companies now generates 68% of her family's income. Notes Lichtenberg: "If you earn it, you get the right to say what to do with it."

Then too, as the distaff half of the baby-boom generation rushes headlong into its forties and fifties, women are feeling a greater urgency about the need to plan for their financial futures. Says Bridget Macaskill, CEO of Oppenheimer Funds, one of the first financial services companies to reach out to women: "They've watched their fathers die and their mothers struggle financially. They've been divorced or watched a close friend or relative go through it. They've been downsized, or their husband or a friend or a relative has. The whole issue hits them like a big blow in the head."

Investment professionals point to the following signs of progress in the women's market:

--By every available measure, more and more women are taking the investment plunge. For example, women are now the primary financial decisionmakers in 32% of the households that own mutual funds, up from 19% four years ago, according to a study this year by ICI. Participation in 401(k) plans is inching up too. Some 60% of eligible female employees contributed to their plans in 1993, up from 52% in 1988, according to the most recent information available from the Employee Benefit Research Institute in Washington, D.C. (By comparison, 69% of eligible men signed on.) And women now make up 60.5% of the membership in investment clubs, up from 49.3% five years ago.

Financial services companies report a decidedly feminine cast to their new account base as well. That's not too surprising, considering that more than a dozen big-name financial services companies, including Smith Barney, Merrill Lynch, Prudential and Oppenheimer Funds, have developed programs specifically for women investors over the past five years. The programs typically offer free literature and brokers knowledgeable about women's special needs. Partly as a result, the number of female accountholders at Oppenheimer has nearly tripled since 1991, so that women now make up almost 30% of its clients, up from 23.5%. Roughly a third of Smith Barney accountholders are now women, up from 25% five years ago. And Merrill Lynch reports that 43% of its accounts are currently registered in women's names; five years ago it was 38%.

Attendance at investment seminars for women is soaring as well. A scant five years ago, 50 women at most turned up for women's seminars sponsored by Smith Barney, notes Jessica Bibliowicz; its most recent such conclave in New York City drew a crowd of 1,000. For its part, Oppenheimer sees sufficient interest to hold more than 30 seminars a month; just four years ago it didn't hold any. Ronna Lichtenberg exemplifies the change in women's mind-set. "It used to be that when my husband and I divided responsibilities, I'd think to myself, 'Okay, Jimmy does the garbage, the grilling and the investing,'" she says. "Now the investing is on my to-do list too."

--When they do invest, women are now nearly as prone to take risks as men. It's easy to see where women get their reputation as risk-averse wimps: Just ask them. For example, in a nationally representative survey of 4,000 Americans earlier this year, three-quarters of the women surveyed by Yankelovich Partners agreed that they always favor safe investments, even if it means getting a low return. And only 26% of the women in a Prudential Securities poll last year expressed willingness to take substantial risks in order to earn substantial gains, compared with 45% of the men.

But what women say about their approach to investing and what they actually do are quite different. For instance, a new study of 401(k) participants by Access Research, a financial consulting firm in Windsor, Conn., finds the sexes almost equally diversified, with men committing 81% of their 401(k) assets to stock and total-return funds, compared with 76% for women. Their selections within the equity universe were not much different, either. For example, women put 15% of their 401(k) assets into long-term growth funds, compared with 17.3% for men, and 14.9% into aggressive growth, compared with 16.5% for men. Concludes Gerry O'Connor, who directed the research: "Women do tend to be a little more conservative than men, but not nearly to the extent that popular myth would have it."

--When it comes to investing, women have the traits it takes. Okay, so you're still a little skeptical of those figures about women-only investing clubs beating the britches off men-only outfits. But face it: The margin was 6.3 percentage points. And it was no fluke--women whipped men in nine out of the past 15 years. Ken Janke, chief executive of the NAIC, attributes this stellar showing to the homework women do, as well as their patience. He says: "Women pay much greater attention to a company's fundamentals, and when they make an investment decision they stick with it, even when the market temporarily turns against them."

In fact, says Washington, D.C. financial planner Alexandra Armstrong, many of her most successful clients are women. "They panic less easily, have more realistic expectations about returns and don't have a racetrack mentality about risk," she says. "They'll say, 'I'm not in it for the big kill, I'm in it for the long haul.'" Adds Jessica Bibliowicz: "Women's goal-oriented approach makes them less vulnerable to buying last year's hot fund and, probably, more profitable in the long run."

As impressive as the gains made by women are, though, they are not enough--not yet, anyway--to lead them to financial security, investment pros say. Consider how the deck is stacked: Women live longer than men (seven years longer, on average), so they need a bigger nest egg to see them comfortably through retirement. But because they earn less, they have less money to work with. Then too, many women take time off from their jobs to care for their families (the average woman is out of the work force for 11.5 years, compared with just 16 months for the average man). Fewer years on the payroll, combined with generally lower wages, mean smaller Social Security and pension benefits, since such payouts are generally based on salary and length of service. Worse, 52% of working women receive no pension benefits at all, because they are only half as likely as men to work for an employer who offers a retirement plan.

That sounds pretty dismal. But it doesn't have to be. To pave the way to financial security, women must simply travel further down the right track they're already on. Here's what the experts say they have to do:

--Women must take charge of their finances sooner. "The biggest mistake that women still make in managing their money is leaving it until too late," says Esther M. Berger. Too often, the motivation for action is a divorce or the death of a husband--two common events with potentially devastating financial, as well as emotional, ramifications. The National Center for Women and Retirement Research at Long Island University reports that only 28% of divorcing women are now entitled to financial support from their exes--that includes child support--and of those women, 34% never see the money that's due them. As a result, the center says the average woman's standard of living drops 45% in the first year after a divorce, while a man's actually rises 15%.

Meanwhile, a report by the General Accounting Office shows that about 80% of widows now living in poverty were not poor before their husbands died. "A crisis is no time to be figuring out what your assets are and how you should be investing them," says Ann Benson, who has been conducting women's investment seminars for Merrill Lynch for the past 23 years. "Women are starting to take a more preventive approach, but the change is not happening fast enough."

--Women must make retirement their top priority. Some 58% of the women in a Merrill Lynch survey last year said they were concerned about outliving the money they've put away for retirement, vs. 40% in 1991. But despite this heightened concern, many women continue to put other financial goals ahead of their own retirement. In fact, according to a 1993 Merrill Lynch survey, only 46% of women ages 46 to 64 had begun saving for retirement before they turned 40, compared with 67% of men. Warns Berger: "If we don't take care of our own retirement now, our kids will wind up taking care of us later."

--Women must invest more aggressively for growth. The good news is that women are not appreciably more averse to risk than men. The bad news is that both sexes are far too conservative in their investment choices. Although the numbers have been inching up over the past few years, only about one in five Americans participates in a 401(k) plan, and roughly one in six owns individual stocks and has money in mutual funds, according to the Yankelovich survey.

The consequence of such conservatism is more severe for women than men because women must make their savings dollars stretch further to reach the same goals. The Access Research study of 401(k) participants illustrates the problem: Although men and women were found to contribute roughly the same percentage of their income to their plan (about 7%, on average) and to allocate their assets in roughly the same way, the average woman's account is worth 37% less--$24,320 vs. $38,460 for the average male participant--primarily because of lower salaries. "Women can't afford to invest just as well as men," says Bridget Macaskill. "We need to do better."

To push themselves to the next level, women must make money management a routine part of their lives, financial pros say. Prudential's Ronna Lichtenberg likens it to keeping physically fit. "I have to work out, I have to count my fat grams, and I have to watch my investments," she says. "Life isn't fair. If it was, I wouldn't have to do any of those things. But I have a mental image of what happens to me if I give up: I weigh 500 pounds, I'm wearing a muumuu and I'm working until I'm 90."

In fact, as Macaskill points out, investing is a lot less work than staying physically fit: Once your plan is in place, you need only give yourself a checkup every six months or so to make sure your investments are still in good shape. And the results are certainly worth it. Just ask Debra Lee, who has some advice of her own to pass along. "Like the Nike ad says, just do it," she urges. "Women have come a long way, but it's no longer enough for us to just have a salary and contribute to the family income. We've got to take charge of our investments too."