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While the absence of women from the investing picture has been researched, written about and highlighted over recent years there is little sign that this gap is reducing. The number of women employed in the financial sector is low, the amount of money women have invested compared to men remains small and the lack of confidence women feel in investing still gets in the way.  In this post, we’ll look at what this gap is, why it exists and how to make investing more accessible for everyone.

FEMALE INVESTING:  THE CURRENT STATE OF THE GENDER GAP

The gender gap in investing is considerable.  Women make up about a quarter of senior roles in the investment industry, received 1% of venture capital funding and a only a seventh of start up funding in 2021.  But the gender gap is not just a matter of female representation. The amount of money women have invested in stocks and shares is paltry compared to their male counterparts.  According to recent research from Boring Money:

• 3.3 million fewer women hold investments in the UK compared to men (the equivalent of three times the population of Birmingham).
• Men in the UK have £599 billion more than women in ISAs, investment accounts and private pensions.  This is greater than the GDP (Gross Domestic Product) of Switzerland.
• The average private pension is £99k for women, £39k less than men (the average for men is £138k).
• Only 22% of women feel confident making investment decisions versus 41% of men. 

WHY IS THERE SUCH A BIG GAP BETWEEN MALE AND FEMALE INVESTING?

And why is it so persistent?  It comes down to three things:  income, communication and culture. 

1. Women have less money to invest 

The Equal Pay Act was passed in the UK in 1971.  Fifty years later the gender pay gap is still 15%.  Women spend less time in paid work because they have children and have greater caring responsibilities.  They thereby lose earning potential, often pay the bulk of (expensive) childcare costs and also live longer.  All these factors mean women have less disposable income and less money to invest in their financial future.

On top of this women have the false perception that they need a lot of money to start of investing.  The £20,000 limit on how much can be put into an ISA every year is perceived by as the minimum to invest.  Actually the minimum needed to open an account and start investing is £25.

 2. Women are excluded from the world of finance 

The financial sector is still overwhelmingly male, pale and stale. Until 2019, of the 1496 listed investment funds in the UK there were more managed by men named Dave (108) than the total number of women who were fund managers!

The biggest barrier to women  investing is that they (quite understandably) want to understand it all before they begin.  But riddled with the most dreadful jargon the finance industry simply does not speak to anyone in simple straightforward English, take into account what motivates women or address the reality of their lives. 

Financial products are designed for and aimed at male customers while the word ‘risk’ is bandied about all the time (how about using the word ‘uncertainty’) creating a fear for women about even starting.

 3. Women are told they are not good with money

False stereotypes about gender are still influential in our society today.  Women were traditionally considered as overly emotional, irrational and lacking the intelligence and logical faculties of men.  Judged as less capable and able to properly manage their personal finances it was seen for her own good that a woman was not allowed to control her own financial situation.  It was only in 1975 (not so long ago!) that a British woman could open a bank account and apply for credit and loans in her own name, without her husband’s permission.

These stereotypes prevail with a gender bias in the images of money and investing in the media.  Men are advised on investment strategies with images showing wallets of cash.  Women are targeted with pictures of saving pennies and piggy banks or told to stop splurging and buy fewer shoes. 

WHY DOES ALL THIS MATTER?

Getting your money to work for you by investing is a powerful way to increase personal prosperity and provide greater independence and freedom.  Through the investment choices we make we can align our money with our values to make a positive social and environmental impact as well as making  financial returns. Women (and in particular younger women) are more likely to invest (or invest more) for social and climate impact if they could invest with a clear goal or purpose for good.

The fact that women are less likely to invest compounds their already existing financial disadvantages, choices, freedom and influence in the world.  It gives them less of a voice.  Bridging the investment gap is critical for women’s personal prosperity, financial equality, for society and our planet.

BUT THE THING IS … WOMEN ARE BETTER INVESTORS!

Although fewer women invest when they do their returns are better.  A study of more than eight million investment accounts by Fidelity revealed that women outperformed men by around 0.4% a year.  Later research by Warwick Business School showed the gap to be even bigger, with women outperforming men by an average of 1.8% over a three-year period.

This is because women buy and hold their investments for the long term with their future goals in mind, invest in a wide variety of things and do not lose money by taking punts on things.  Women prefer a slow and steady, boring is best investment style.  And while the difference in performance does not seem that much as a percentage, if you factor in the magical force of compounding this this can make a huge difference in financial returns over time.

IT’S SIMPLER THAN YOU THINK (OR ARE TOLD) TO START INVESTING

So what can we do about all this?  Apart from sorting out equal pay, creating an inclusive financial sector and overturning the system we are in….?!?  Well, to get going with investing the best thing is to start investing NOW!

With your financial foundations in place (an emergency fund, a cash safety net and paying off consumer debt) you can start investing small and simply and get going with growing the financial future you want for yourself.

Investing is something that can be learned and the principles behind it are very simple.  It is about making up your mind to invest in your financial education.  Take a bit of time to learn the basics so you can understand and get your money working for you.  Read a book, learn your Investing Basics on You Tube or attend an Investing Taster Class with me. Know also that you can invest for purpose and profit, your money can back things you care about and avoid things that you don’t want to have anything to do with.

If you’re unsure where to begin or want to learn more about how I can help you bridge the gap, get in touch. We can have a free, no-obligation chat to work out how you can start investing for your future.

Listen to me talk about making money work for you by investing (rather than trading time for money) on Resonance FM with the lovely Patricia Vincent.

Resonance FM is a Community Radio for the Arts and is described as ‘The best radio station in London’  (The Guardian).

Please do have a listen HERE! (25m)

When you start investing it feels very exciting
To open an account yourself, put some money in and actually invest in something!
You’ve got over the fear of pressing the button the first time to go
Thinking you might die and hoping no one will know.

But now your investing career has got off the ground
Please to be careful who you tell who is around
The news that you have invested in the stock market
Could trigger other people’s fears and opinions who understand nothing about it!

As with any endeavour or creative project
Confidence can easily be crushed by others and leave us feeling abject
It may be wise to keep your own counsel for a little while longer
Letting only those you really trust know – till you are even stronger.

Many women feel bad or full of woe
Because they wished they’d started investing a long time ago.
But how on earth would we know what do
When we are not taught anything useful about money or investing at school?!

Only in 2014 did financial education became part of the national curriculum
After a campaign from Martin Lewis of MoneySavingExpert.com
But by 2020 many parents expressed the opini – on
That this area of education was still sadly lacking for their children.

With a financial education gaining the knowledge and confidence is the tricky part
But if we learn ourselves we can show others we love how to start
Please be reassured that it’s never too late
My Dad taught himself and started investing at the age of 58!

With an Investing Taster Class you can start small, start simple and start now
Giving you the principles of investing and the basic what, when and how
Investing in your financial education can be simple, fun and jargon free
For £25 plus a small booking fee.

People often say that investing don’t you know
Is no better than gambling in the casino!
With both you are risking your money for a profit or return
And look to past performance or behaviour to learn.

Gambling however is a very short-term thing
With investing you buy and hold stocks for the long term for what they can bring.
You never invest money you can’t afford to lose (of course)
Which is not the same as taking a punt on a horse!

Investing is slow and steady, boring is best
Not making it complicated is really the test.
Investing regular amounts every month is a really good thing
To take advantage of something called ‘pound cost averaging.’

You invest across the globe in different sectors and many companies
Diversifying your risk protects you against market ups and downs i.e. volatilities
You also take your dividends and reinvest them straight away
To harness the power of compounding to your advantage every day.

Successful investors and professional gamblers have a strategy they stick to
Not making decisions on a whim or a tip from some random friend they bump into.
Personally, when people learn I am investor and make a recommendation to me
I thank them, ignore them and smile very sweetly!

Once upon a time 50 years, 2 months and 4 days ago
I was born into this world and this is me and my Dad getting to know
Each other. It was remarked by a friend that while I look quite saintly
He looks terrified at the prospect of being my father (quite frankly).

With Father’s Day this week I would like to appreciate my Dad and say
How grateful I am for teaching me how to invest in a simple and successful way.
He never told me what to do, it was the how, with a strategy
To follow without needing much time and not needing a lot of money.

My Dad was sold some shabby financial products, things off the shelf
That performed really badly so he decided he could do much better himself.
Teaching himself and investing the second time around at what could be seen as quite late
Acquiring his first share at the age of 58!

He taught me never to invest money I couldn’t afford to lose.
He’s someone to talk to that I trust whenever I get confused.
Always kind, patient, humorous and clear
He makes it accessible, normal and without any fear.

We talk less about money than politics, religion or sex in this country
And we have judgements or guilt that we should know, or have done it already
But deciding to learn and understand from him what investing was about
Has brought us closer together – of that I have no doubt.

While there are far fewer female investors then men
Only 20% of women versus 33% of them.
A study in 2018 by Warwick Business School
Showed that women beat men by 1.8%, which when compounded away – is really cool!

The reasons for this, they explained, are threefold
Women are more risk aware while men are more ‘bold’.
Women buy and hold their investments rather than trade i.e. buy and sell
Men lose the most trading when stock markets are not doing at all well.

Women also spread their risk and diversify
Across a range of sectors and regions: a broader wealth pie.
They invest for the long term with specific goals and purposes in mind
For themselves, their families and what they can leave behind.

Where women get stuck is that we want to understand it all before we begin
This is challenging and bamboozling with all the jargon and acronym(s).
But by reading this I hope you can see
That gaining a financial education can be simple, fun and jargon free!

Most people invest because they want to make money.  Of course!  But what is behind that desire to have more money.  What do you hope that it will bring you that you do not have right now?

I started investing for 2 reasons.  One, I thought there might be better a way of earning a living than my work as an architect.  I wanted to be free of doing something I did not enjoy for an uncertain financial reward.  Two, I thought learning about investing from my Dad would allow me to share an interest of his.  For me it was about freedom and better communication with someone I loved.

INVESTING CREATES ASSETS

The purpose of investing is putting money into assets.  Assets create wealth for you in the long term by giving you an income and/or increasing in value.  This could be stocks and shares, property, interest bearing accounts, artwork, jewellery or wine!  The wealth that an asset creates is independent of your time.  This is very different from having a job or business when we sell our time for money.  By investing you have money working for you rather than being a wage slave.

WOMEN RETIRE ON LESS THAN MEN

If you are under the age of 50 you cannot expect to live on the state pension alone and need to top up with a private pension. The average amount in a 60-year-old woman’s pension pot is £51,100 compared with £156,500 for men^1.  This is 67% less!  The average private pension for women in the UK is far less than men because of generally lower salaries, timeout for childcare, care of parents, childcare costs and a lack of knowledge and understanding about money and pensions.

THERE HAS NEVER BEEN A BETTER TIME TO INVEST

The great thing is that there has never been a better time to invest in the stock market.  And there is no better person than you to do it!  As you are the one that cares the most about your money.  With a basic understanding of a few principles behind investing and a bit of discipline you are perfectly capable of becoming an investor and creating far better returns in the long terms than leaving your money in a savings account.  The internet has made it really easy to invest in a way that works for you in your life.  You can start with as little as £25 per month.

START SIMPLY, START SMALL AND START NOW!

Managing, controlling and investing money is an essential life skill to protect and provide for your financial future and for those you love.  We are not taught this at school.  So please do not feel bad that you don’t know how to do it or have not started already.  The fact you are reading this means you are taking an interest on your financial education.  Well done!  If you are interested in investing please join one of my online INVESTING TASTER CLASSES.  It will teach you the first steps of investing.  These first steps are simple, easy to follow and build confidence.  With this support and encouragement many clients have gone on to become enthusiastic, successful investors.

¹ Pensions Policy Institute, Understanding the Gender Pensions Gap, July 2019

Disclaimer:  Simple Successful Stocks are not financial advisors and the content of this article is for financial education only.  Please read our disclaimer here.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”

Paul Samuelson

INVESTORS LOVE STORIES

When I tell people I invest in the stock market they often 

By and large, it’s not about doing research on stocks, or having a good gut instinct, or knowing what’s going on in the biotech industry. For people to build wealth in the long term, there is one trait that matters the most: being disciplined. It’s important to know that trying to time the market—selling before you think it’s going to crash, buying when you think it’s going to rally—is historically very unsuccessful. What’s more successful is having a financial plan and sticking to it regardless of what’s going on.

No one knows what’s going to happen, and people who think they do get themselves into trouble. Don’t panic when things seem bad or get overconfident when you’re doing well. Research consistently suggests women are better at this.

STORIES ARE NOT GOOD FOR INVESTING

PASSIVE INVESTING IS THE WAY TO GO

Starting early is important. Diversifying is just as important. Here’s a good definition of diversification. If you don’t want to read it, I’ll give you snapshot: Being diversified means that you are have your money in a lot of different types of investments—bonds, stocks, companies in established markets, companies in emerging markets, companies in different sectors, etc. The purpose of being diversified is that when one part of the market goes down—stocks, for instance—others may go up or go down less. The purpose is to protect yourself against catastrophe.

There’s also a concept I think you should be familiar with. It’s called passive investing. The idea is that it’s smarter to invest across the entire market and then not pay attention to it, than it is to pick stocks or pay someone else to pick stocks. It’s easier and less expensive, and historically it’s been more successful. In fact, Warren Buffett made a $1 million wager that passive investing would beat hedge funds—and he was right. It’s why he advises his heirs to invest passively with their money.

“George Soros said that good investing should be boring. The largely male hobbyist investors who analyse, fiddle, tweak and take punts are generally doing less well than someone adopting a much cheaper, less complex approach,”

While there are far fewer women investing in the stock market than men, research shows they are better at it!  Why is this?

THE DIFFERENCE IN MALE AND FEMALE INVESTING

In 2018 Warwick Business School published a study where they had surveyed 2,456 investors, 450 of which were female, between April 2012 and July 2016.  It compared male and female investors through Barclays and their trading behaviour over a 36-month period. The study look at a range of criteria;  the amount of money invested, the type of investments held and how often investors bought and sold.

HOW DO WOMEN INVEST DIFFERENTLY?

1. Women invest for the long term and are more risk aware

“Women also take a more long-term perspective, trading less frequently. This possibly means women are investing more to support their financial goals, whereas men are attracted to what they see as the thrill of investing.”  “The study showed women prefer a more ‘slow and steady’ risk-averse approach to investing.  the don’t tend to choose the riskier ‘lottery style’ investment options that men often favour.

Women are motivated by what they can create through investing rather than the success of the activity itself.  They prefer a ‘slow and steady’ approach to investing, the study showed women don’t tend to choose the riskier ‘lottery style’ investment options that men often favour.

She explains: “The stock market is often portrayed as a high energy, risky environment, but this analysis shows that taking a more long-term view about what to invest in, rather than picking eye-catching and potentially more volatile shares, is actually likely to provide a better return on your money.

Put money into less speculative or ‘risky’ investments

They keep hold for the investments that are doing well and

2. Women buy and sell less

The purpose of investing is putting money into assets.  You buy and hold assets to create wealth for you in the long term through providing an income and/or an increase in value.  In the study it was found that women only traded nine times a year on average, compared to 13 times for men.

In the words of George Soros ”good investing should be boring. The largely male hobbyist investors who analyse, fiddle, tweak and take punts are generally doing less well than someone adopting a much cheaper, less complex approach,”

Women buy and sell their investments less than men.  Make less speculative investments and keep the costs down.  Buy it and leave it alone rather than moniter, tweak and make changes in an attempt to second guess what is going to happen to the stock market.  Women  save on the fees needed to do this and the impossible task of trying to work out what the stock market is doing ‘timing the market’  and get the full benefits of time in the market.

Women only traded nine times a year on average, compared to 13 times for men.

3. Women have a greater diversity in their investments

The biggest difference in the way that men and women invested and the one that most impacted on their returns was in the type of stocks they invested in.  Female investors had their money in funds.  This means their money was invested across a range of companies, sectors and parts of the world and spreading the risk.  The Warwick Business School analysis identified that men were more likely to adopt a “lottery style” of investing which they described as the tendency to invest in more speculative, lower priced shares that might increase in value substantially.  Women tended to research what they were buying and stick to those investments that had a good track record.

“Men are just a little more likely to be drawn to more speculative stocks whereas women are more likely to focus on shares that already have a good track record.

It was also found that men would keep hold of shares that that lost money, hoping they would recover, while selling off the ones that had actually increased in value.

It is well documented how a lack of knowledge and confidence is one of the biggest barrier to women investing in the stock market. This confidence can become overconfidence in their ability to actively manage a portfolio. That makes men susceptible to an “illusion of control,” which is a tendency for people to believe they control chance outcomes more than they really do. This mentality often leads to over-trading and higher transaction costs that dilute performance.

An overconfident investor will often feel an extra urge to buy more in good times to capture more gains, or sell more in tough times to prevent future losses.  Men are more vulnerable to such impulsive behavior, on average and this affects their investment returns negatively.

THE DIFFERENCE THIS MAKES

The group of women outperformed males in the study by about 1.8% per year.

With the magic of compounding  these differences in how men and women invest can make big difference over time.

While annual returns on investments for men were on average a marginal 0.14 per cent above the performance of the FTSE 100, annual returns on the investment portfolios held by women were 1.94 per cent above it. This means returns for women investing outperformed men by 1.8 per cent.

If you wish to see how discover more about how investing and your female superpowers could work for you then  please book a no obligation call with me here to ….

A Yougov study found that 52% of women have never held an investment product, compared to 37% of men.  45% of women are open to investing and think it is good idea but want to understand what they are doing and the jargon filled nature of the financial sector is very off putting. But when women do invest they achieve better returns.

Following on from being more consistent is the observation that women also tend to put more time into the research and learning phase of investing.