Why women are less invested than men: What can they do about it?

Why women are less invested than men: What can they do about it?

Apr 02,2024
As the cost of living keeps rising, investing and smarter money management is becoming increasing important. Women, too, need to learn money skills.
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Women have typically been revealed to be less confident about investing than men. That may be because they were not in a position to do so financially or because they were not confident about their financial and investing knowledge.  

Investing is important for a number of reasons. Long-term, it is necessary to provide a stable income for retirement. Short term, you'll need spare cash for emergencies, money for holidays or "big ticket items" such as home deposits or car purchases, for example. 

In the longer term, investing can go a long way towards beating inflation and building long-term wealth, as well as having significant tax benefits.

Why do women invest less than men?

According to financial research company Boring Money, figures for January 2024 show only 19% of British women between the ages of 25 and 44 invested, against 34% of British men. Between January 2023 and January 2024, the gender investment gap in the UK increased by £54 billion (€63.2 billion) to £567 billion (€664 billion).

The gender pay gap, which still persists in several developed countries, often leaves women with significantly less disposable income than men. This means they may be less willing to take risks with their money, especially if they have dependents.

In November 2023, the average salary for men in the UK was £41,850 (€48,982), versus £28,765 (€33,667) for women, according to the Office for National Statistics.

According to insurance company Shepherds Friendly, if women invested about 7.5% of their yearly income annually between 2023 and 2030, they could see their savings grow to about £22,780(€26,662), against £33,142 (€38,790) for men. This is assuming an annualised return rate of 3.77%.

As a result, when women invest their disposable income, they typically receive less return on their money than men, because they have proportionately less capital to invest in the first place. In the UK, London, and Brighton and Hove have the largest gender investment gaps, while Dundee in Scotland has the smallest one.

Women may not always see investing as a financial priority.

A YouGov survey of 1,000 adults in the US revealed that 62% of men surveyed said they considered investing to be either fairly or very important, whereas only 55% of women felt the same. On the other hand, some 94% of women said that saving money was a priority for them, against 85% of men.

UK mutual society Shepherds Friendly also found that women are far less confident about their investing knowledge, at 25%, versus 39% of men. Women are also typically more likely to believe that the stock market is too risky for them, as well as worry more about the performance of their portfolios.

US Finance website NerdWallet pointed out that about 29% of women felt more anxious about their Investment portfolios, versus 22% of men. Similarly, only 33% of women were confident enough to handle their own Investments in 2021, according to Investment group Fidelity. 

Expert tips for women starting to invest in 2024

Women who would like to start investing this year face a challenging financial and economic climate. Interest rates remain higher than they were and therefore driving up the costs of mortgages, while the cost of living has also added significantly to bills.

Doing your own research about the types of financial assets you might be comfortable investing in and which can offer the best returns in the current economic climate is key.

Shepherds Friendly's chief Finance officer Derence Lee said, in an email note: "Take some time to learn about the different Investment options available to you. Stocks, real estate, gold, and bonds are some of the main assets that you can invest in. Learning about them will help you to work towards your financial goals."

For women who worry that they may not have enough capital, or that investing may require more upfront money than they are comfortable with, Lee recommends starting small, but being consistent and investing on a regular basis. This is especially true as minimum investment amounts for several providers have consistently fallen over the last few years, to as little as £1.

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Lee says: "If you’re new to investing, it’s a good idea to start with a small amount of money before gradually increasing your Investment as you gain confidence and experience. This way, you can get used to the process while also making yourself less vulnerable to market fluctuations.

"Investing often comes with risk, as assets can lose value over time, so it's important to keep this in mind. However, different investments offer varying levels of risk, so it's recommended that you explore what option works best for you before you commit."

However, if you're still hesitant about handling your own investments, it may be best to speak to a financial expert or adviser who can better help you come up with a portfolio best suited to you.

As Lee says: "If you're unsure about the best investment type for your financial goals, consider consulting a financial adviser. They can help tailor a plan for you based on your objectives, risk tolerance and financial situation.

"Speaking to professionals can also help make sure that your investment portfolio aligns with your financial goals going forward. Advisers can suggest cost-effective investment options to curtail the potential feels and expenses involved that could otherwise eat into your returns over time."

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This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances. Also remember, we are a journalistic website and aim to provide the best guides, tips and advice from experts. If you rely on the information on this page then you do so entirely at your own risk.

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