Should I care about the gender investment gap?

Did you know the gender investment gap is greater than the GDP of Switzerland? Shocking, right? The gender investment gap means that women are far less likely to invest than men.

I believe it is important to encourage everyone to take control of their finances and maximise their income where possible. This is why I am raising awareness of this important issue. Women shouldn’t be financially disadvantaged simply for being women and should be encouraged to invest within their means.

In this post I will cover:

  • What the gap means and how big it is
  • Common misconceptions
  • How pensions come into it
  • Why the gender investment gap matters
  • What you can do about it
The gender investment gap will take over 100 years to close

What is the gender investment gap?

New research from consumer money site Boring Money has revealed that women are missing out on a potential £599 billion – which is greater than the GDP of Switzerland – otherwise known as the Gender Investment Gap. 

The survey of 6,000 UK adults found there are an estimated 6.4 million female investors compared to 9.7 million male investors. This means 3.3 million less women hold investments or private pensions in the UK – the equivalent to three times the population of Birmingham.  

Previous research found it is not closing significantly with generations either. Just 4.4% of millennial women have an investment product, compared with 7.3% of millennial men. For Generation X, 16.1% of men are investing versus 9.6% of women.

At its current rate, it will take over 100 years for the gap to close, according to research from Yes She Can, an educational project examining the gender investment gap.

Their research found the industry isn’t just speaking the wrong language for women, it is often having the wrong conversation. This means communications falling on deaf ears and having no impact.

Additionally, advertising and communications targeted at women often reinforce the outdated mantras that women are risk averse and lack confidence as investors.

The common misconceptions

There are a lot of misconceptions surrounding women and investing. Here, I will try to debunk the three most common misconceptions:

  • Women don’t like taking risks

This is an outdated stereotype that is thrown around fairly regularly. The women who took part in Yes She Can’s research described themselves as CEOs of their households, taking controlled risks on a daily basis – which is all investing is.

They also view femininity as strength and resilience and are ambitious for their futures, meaning they would likely take the opportunity to boost their financial situation if they knew it was an option.

  • Women lack confidence when it comes to investing

In fact, female investors are just as confident as their male counterparts and are more likely to talk about it. However, by reinforcing the idea that women lack confidence, the industry is in danger of reinforcing the perception that investing is not ‘for people like me’. This will discourage women from investing rather than encouraging them to give it a go.

  • Women have taken a conscious decision not to invest

Actually, most women have simply never considered it or thought it is an option for them. 59% of non-investing women had never thought of investing as an option, while 87% of non-investing women had never been encouraged to consider investing

Pensions

Pensions also come into the gender investment gap. The average women’s pension pot at 65 is a fifth of the size of a man’s, according to The Wisdom Council, meaning women are retiring with significantly less funds than men.

Most women (and men) don’t realise they are already investors through their workplace pension. Simply realising this can be powerful. Over 75% of the final sample of 2,250 involved in Yes She Can’s research didn’t know that they were investors, despite the recruitment criteria specifying that they had to have a workplace or personal pension.

According to Boring Money’s research, the average private pension is £99,000 for women which is over a third less (£39,000 less) than the average male private pension which stands at £138,000.

This lack of awareness is worrying as it suggests people don’t know what is happening to their money and are not in control of their pensions.

Credit: Boring Money

Why does it matter?

Any form of inequality is bad. It means individuals are disadvantaged through no fault of their own and miss out on opportunities that could benefit their lives.

Investing can be a great way to increase your wealth. If women are missing out on investment opportunities, wealth inequality between the genders will only increase. With women already earning less than men – the gender pay gap for full time employees is currently 8.9% in the UK according to the ONS – investing is even more crucial.

Women also have a longer life expectancy than men. Crudely put, this means they need to have more money put aside so they can provide for themselves in those extra years. Poverty in retirement is a real issue, which sensible financial planning and investing in advance can help alleviate.

There’s a huge commercial opportunity in encouraging women to invest. The industry has been estimated to be worth £350 billion, something companies surely would want to capitalise on.

The gender investment gap serves to increase wealth inequality

What should I do about it?

If you identify as a women, it’s pretty simple. Start investing if you can and encourage your friends to do the same. With wealth apps and robo advisers, you can now start investing with as little as £1. Always make sure you do your research first though and avoid falling into these common pitfalls.

You should also start taking your pension seriously. Understanding your workplace pension and taking full advantage of the scheme available to you should be a top priority. There are also options available to start saving into a private pension to add to your overall pot.  

If you identify as a man, don’t worry, I’m not going to suggest you stop investing to help close the gap. That doesn’t solve the problem at all! Instead, talk to your female friends and family members about investing and point them in the direction of useful resources if they seem interested.

People are far more likely to make financial decisions based on recommendations from friends and family, than from adverts or other information. Use your influence positively to encourage women to take control of their financial future.

Boring Money believes financial institutions are failing to address the life events which present money challenges for women.

Its female members helped to identify six of these – referred to as ‘Messy Life Stages’ – including motherhood, single parenting, divorce, serious illness, ageing parents and empty nesting.

In a bid to make a positive impact, Boring Money has launched a new service called Visible!, which is aimed at women in their 40s, 50s and early 60s.

This is designed to help grow female engagement with investments and pensions.

Conclusion

Inequalities don’t benefit anyone and closing the gap should be a priority for us all. If you feel able to do so, I urge you to take action.

I’ve spoken about my own investing journey on this blog before and plan to continue to do so, in the hopes of inspiring others to start themselves. I’m by no means an expert and will probably make mistakes along the way, but I will learn as I go, and the long-term benefits should outweigh any short-term losses.

Don’t forget to follow me on social media @Katie20Percent to keep up to date with all my latest posts.

Did you know I offer freelance writing services and personal finance workshops and talks for schools, workplaces and organisations? I also regularly feature in the media. Get in touch via kroyalsfreelance@gmail.com or reach out on Twitter @Katie20Percent if you’d like to find out more.

If you found this post on the gender investment gap interesting and/or useful please share it on social media or with your friends. How do you feel about the gender investment gap? Has it encouraged you to start investing? Comment your thoughts below, I’d love to hear from you!

 

8 responses to “Should I care about the gender investment gap?”

  1. […] are still far more men engaged in finance than women. Meanwhile issues like the gender pay gap and gender investments gap still […]

  2. […] Lansdown’s research found 70% of women say they don’t have any investments, compared with 59% of […]

  3. lifestyleseason – Lifestyle, Fashion & Beauty Blogger!

    Great post! Thank you for sharing! This is super useful and I agree women should start investing!

  4. Great post Katie! I’m certain the numbers are probably similar here in the U.S.
    Because, tradtionally, women have been left out of conversations involving finances, especially investing, most are unaware of the options available to them or are afraid to get involved. That’s why post such as this are important and necessary.

  5. I knew there was a gap but didn’t realise how big it was and that it was also in pensions! Thanks for sharing

  6. crystalsandcurls – I'm going through a bit of an existential crisis right now, I'll tell you about myself when I figure out if I'm real or not.

    This is so interesting, Katie. I work at bank and used to deal with term deposits and it was eye opening just how many women know nothing about their finances – people would literally complain because we’d say “uh – dude i need to ID your wife before we open an account in her name?”. I’m shocked the gap isn’t lessening with the new generation though! xx

  7. Em and Jess – United Kingdom – Two sisters who talk about travel, lifestyle, and well-being on our blog Em and Jess.

    I love that your blog covers such important topics that I never seem to see anyone else talking about. I’d never even considered investing before but I definitely think I’ll look into further now after reading this!

  8. Michelle (Boomer Eco Crusader) – Canada – Hi there! I’m Michelle and I live in Kitchener, Ontario, Canada. I am married with two young adult daughters. I’m a big fan of reducing waste, using less plastic, decluttering and simplifying life as much as possible.

    Another great post Katie! Having worked with workplace pensions for 30 years, I totally agree that people need to pay more attention to them. People often leave their companies and have no idea what happens to their money. It often ends up in unclaimed property and a lot of time and money is spent trying to track people down.

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