How Do Women Invest Their Money?
💸 Investing helps us grow our savings, build wealth, and support projects we believe in. But the gender wage gap and other barriers often put women at an investing disadvantage compared to their male counterparts. We also have a £15 billion gender investment gap in the UK. I strongly believe that we can change these stats.
So what do we need to do to boost our investing confidence, and where do we start? Firstly, don’t beat yourself up if you haven’t got started. Perhaps one of the main barriers to women who want to get into investing is the nature of the financial institutions themselves. The financial industry tends to be male-orientated, often failing to recognise and cater to women. Financial products are also often laden with jargon and have an alienating nature about them. So it’s normal to feel discomfort about getting started
Investing is crucial, so we should think more positively about making it more inclusive. We’ve made it our mission at Vestpod - and hope to debunk the myths for you, make investing part of your financial wellbeing journey and make sure you’re doing it with confidence and pride.
***
You can listen (20 min) and subscribe here:
***
women invest - and they do it very well
“Conversations about investing have traditionally been patronising toward women, with the assumption that we are either too ‘risk averse’ or lack the necessary knowledge needed to be successful investors. ”
We keep on saying this at Vestpod: women do make great investors. Studies show that women spend more time researching their investment choices and are more likely to invest for the long term rather than day trade (day trading is more short term and carries more risk).
Women are levelling up. Recent research show record number of women are now investing outside of retirement.
We need to break the gendered stereotypes about what ‘investors look like’. No, it’s not all rich, white men who are experts at investing! Indeed, conversations about investing have traditionally been patronising toward women, with the assumption that we are either too ‘risk averse’ or lack the necessary knowledge needed to be successful investors.
We could all achieve better investment outcomes by paying more attention and learning from how women invest:
Focus on the long-term: the average length of time a woman holds a fund is longer. This is partly because women are less likely to panic when markets are turbulent, but also because they’re more likely to keep their long-term financial goals at the forefront of their minds, and are thus less likely to act on a whim, which is something I observed with the latest day trading craze.
Be confident, but not excessively: While a healthy level of confidence is necessary for financial success, overconfidence and a reluctance to admit your mistakes can be detrimental to your investments. Statistics from the Financial Industry Regulatory Authority show that 54% of women assess themselves as having a high level of investment knowledge, compared to 71% of men — but when women do invest, they tend to perform well (and outperform men by 0.4% according to Fidelity’s research, and by 1.8% according to Warwick Business School and Barclays). This could be explained by a more humble and disciplined approach to investing (Wells Fargo Investment Institute).
Make sure to invest consistently: One of the biggest problems with panic selling is that close to 31% of panic sellers never reinvest the money in the stock market. However, the golden rule of investing is to stay invested — yes, even when the stock market fluctuates! After all, if you ride out a big dip, you can sometimes see even better returns. With pound-cost averaging, which essentially means investing a fixed amount on a consistent basis (eg. weekly or monthly), regardless of what might be going on with the stock market, you can smooth your returns. That’s why I like to ‘set it and forget it’ — automate your investments and leave them alone.
Ignore the noise and do your own research: At Vestpod’s Introduction to Investing workshops for women, we often talk about ignoring the noise and the trendy, ‘hot’ investing advice. Yes, social media or your friend’s advice can sound tempting and make you feel like you’re missing out unless you get involved pronto, but over-trading on impulse or trading frequently is expensive and risky. It’s key to do your own research, there’s a plethora of free online resources and books to help you make better decisions and you can always talk to a financial advisor for tailored help.
Align your investments with your values and goals: Whether you want to make more ethical, sustainable investments or want to lock your money away for 15 years to save up for a deposit, it’s important to know why you’re investing in the first place. Women will own more than 60% of the UK's wealth by 2025 (according to the Centre for Economics and Business Research), and they like to invest their money in line with their values: what’s best for their families, communities and the planet. A massive 90% of millennial women say that social and environmental causes and issues are very important and drive much of what they do. Aligning your investments with your goals and values not only helps shape your investment strategy (eg. how long you’re willing to stay invested for), but it also helps keep you motivated.
Understand your risk tolerance: Contrary to popular belief, women are risk aware, not risk averse. Risk awareness helps women make more intentional and calculated decisions, and while there is often perfectionism at play— a lot of women I meet postpone their decision to start to invest until they know absolutely everything — when women do get started with investing, they are fully aware of how much risk they’re willing to take on. Being aware of your risk tolerance, which is determined by everything from how long you want to stay invested for.
getting started
Education is key! While you can’t change the financial services industry (although it is finally beginning to respond to women’s unique needs), we can definitely educate ourselves about investing. We are working on it! Take a step by step approach to investing. But we also want to make it clear that you can learn ‘on the job’, you don’t have to know absolutely everything about the stock market or investing in order to get started. Of course, basic knowledge obviously helps! So, to get started - buy a simple book on investing, read a couple of online articles or listen to a few podcasts - hint, we have lots on Vestpod.com!
Find an accountability friend who also wants to become a more confident investor and discover ways to educate yourselves together - share your experiences and exchange advice.
Understand the products, pensions are investnents, as are S&S ISAs
Get started small, and automate. One good way to start investing regularly is by putting 10, 20 pounds a month in an automatic investment plan - that way the money automatically leaves your account and is invested on your behalf by a platform called a robo-advisor.
Time is your friend:
There is no perfect time to start: just get started!
Take a long-term approach
Time 'in' the market vs. timing the market
Diversification
Don’t put all your eggs in one basket
Build a portfolio that suits your goals and level of risk
Consistency
Invest regularly
Don’t let your emotions get to the better of you and follow your own path!
*** #ad Sponsored by Chase, a digital bank that makes every day rewarding. Get 1% cashback on your everyday debit card spending, 24/7 customer support, and a numberless debit card to help keep your details safe. Download the free Chase app today. 18+, UK residents. Cashback exceptions apply.***
