The Investment Gender Gap
While the gender pay gap has received a lot of attention in recent times, there’s still an area where women are losing out and it’s one you may not be aware of.
The gender investment gap is arguably just as pressing as the pay gap, as it means many women are far less prepared for their long term financial health than their male counterparts.
Not investing may actually be one of the riskiest things you can do, because just saving money won’t ever get you to meet your long term saving goals.
A YouGov poll released in April 2018 stated that 52% of women in the UK have never owned any investment product.
Why is this percentage so high?
Well, studies show that women are less confident and knowledgeable about investing. Or at least they think they are.
Only 28% of women feel comfortable investing some of their money compared to 45% of men and only 13% of women feel they have a good knowledge and understanding of investments.
Who do I trust?
Women tend to see investing as “not for them”. Instead, it is thought to be something for “older, wealthier men”, with words like “untrustworthy, masculine, unwelcoming and vague” being cited by an investigation from Britainthinks.
However, saving solely in cash reduces the returns they are likely to receive. Research shows that this may be because women tend to have more specific objectives for their money.
When it comes to financial decision making, women are more likely to think about day to day priorities, with many money choices still being perceived as male or female. Women feel more responsible for food shopping and household items for example, and men feel more responsible for things like choosing utility suppliers or buying high value items like TVs and cars.
Taking a risk
Women have a more pessimistic financial outlook too. In a survey held in 2017 looking at a 6-month period between Sept 2016 – March 2017, a high proportion of women consistently viewed the performance of the UK economy, their own personal finances and their household finances as having worsened during that time period.
This goes some way to explain the pessimistic outlook on their financial security over the next decade.
Combined with the gender pay gap, women having a pessimistic financial outlook and being more risk averse, the investment gap is very apparent and it’s affecting the financial future of females.
Managing Director of Parsonage Financial Planning Flora Maudsley-Barton believes that
"The gender gap, although narrowing in many areas (such as pay) is still prevalent in 2018 and is an issue particularly when it comes to investment, with women typically receiving less investment income from property, dividends and savings interests to name a few. Research would show that one such reason that the gender investment gap exists is because women are typically seen as being ‘risk-averse’. This outlook is quite simply outdated, and women now make up around 45% of investors, meaning that they have a huge stake in the market. Opportunity is equal and there is no real reason for a gender gap to exist in these circumstances and by shining a light on the issue, hopefully we are closer to resolving it."
This is disconcerting, given that women are likely to live longer than men.
A study by Which? found that the average payment to women is just 81.9% of the average payment to men.
The disparity comes from different NI contributions both genders have usually made throughout their working lives, with women still at a disadvantage for taking time out to care for their children and because the gender pay gap means they don’t have as much to invest.
Our research shows that as a result of lack of investment women are £29,000 worse off in retirement.
Studies are now showing that despite the issues and self-perception of low knowledge and confidence, women are actually better investors than men and have outperformed men for the past decade.
So the trick is not necessarily to make yourself the fountain of all financial knowledge, although seeking out some sound advice is never a bad thing. Closing the gap may be as simple as taking that first step and making a small but calculated investment.