Women and investing

It is sobering to think that up until 1982 pubs and bars in the UK could refuse to serve women and, as late as the mid-1970’s, single working women could be refused mortgages unless they could secure the signature of a male guarantor. Thankfully, the last 35 years have seen significant changes. Society has moved on with an increasing number of independent, professional women of high net worth. Women are earning and spending more than ever before. They now acount for over 85% of all consumer purchases and, between 1998 and 2013, the number of working mothers who are the main household breadwinner rose by over 80%.

However, this progress in financial independence is seemingly not reflected in investing; here, women are statistically still significantly trailing behind men.

Why aren’t more women investing?

As a woman myself, working at a company that has an equal balance of men and women employees and an ethos that pro-actively embraces flexible working and women returning to work, I wondered how women were reflected within our own client base – is there a similar distribution of male and female investors?

A quick look at our data showed that just over 20% of our investors are women. This may be no lower than any other investment business and possibly an accurate reflection of the investment industry as a whole, but it begs the question – why, in this day and age, aren’t we seeing more women investing?

What’s stopping women from investing?

Unlike previous generations, nowadays women have the earning potential of men, are financially independent, knowledgeable and have access to a plethora of information at the touch of a button. So why is it that we are considering where to invest money, we are statistically more likely to place our money in cash savings with zero interest than try something we perceive as higher risk - such as stocks and shares or alternative investments such as Direct Lending and peer to peer lending? Are we potentially losing out financially through being cautious?

A significant amount of research has gone into this dearth of women investors– after all what investment company wouldn’t like to tap into such a large and lucrative group?

In a report by britainthinks.com and the Financial Times, researchers found that:

  • Even though the financial role that women play is changing, their levels of investing remain lower than men.
  • Women feel less knowledgeable generally and specifically lack confidence about investing
  • Women tend to see investing as not for them – rather it is thought to be the preserve of ‘older, wealthier’ men. Something women feel is reinforced by the way much investment advertising is targeted.
  • The need to feel safe defines women’s approach to financial planning to a much greater extent than men’s.

The consensus amongst many researchers is that there is a real difference to how men and women approach their finances. For women, maintaining financial security is a key driver whilst men’s priorities are centred around ‘making money’ - with a focus on elements like returns and profits. Often the language and imagery used reinforces the idea that investing is risky and that to succeed you need to take an aggressive approach.

Financial security is key for women and therefore many of us choose ‘safer’ financial options; those that are tangible, long established and built into the psyche of being a sensible choice or the ‘done thing’ such as property, pensions, and savings. The problem is that ‘safer’ options such as savings simply aren’t providing much of a return and particularly in the current economic climate, many of us are losing money in real terms. It is also important to remember that pensions and property are themselves not without risk.

Moving forward – how to get more women investing

This discrepancy between investing activity and gender is concerning – both in the present economic environment and as we look to the future. In the here and now, low interest rates coupled with rising inflation and pay caps, means that many people with money in cash ISAs or high street savings accounts are likely to be earning meagre interest (and effectively losing money in real terms).

Looking to the long term too is an important consideration. The reality is that we are living longer and as a nation we are simply not putting enough aside for our old age. At the moment it is the ‘millennials’ and future generations that will have to take the financial brunt of this ageing population; working longer until retirement and finding it harder to get a foot on the housing market .

It would be a real shame to see women potentially miss out by continuing to view investing a men-only realm. So, what could the financial industry do to bring more women into the fold and consider investing as a legitimate viable, long-term option for their money?

Closing the gap between financial goals and confidence

One in five women in the UK are the main breadwinner and increasingly in control of household finances, indeed research suggests that by 2020 the majority of women of all ages will be in charge of every household financial decision. Yet only 38% of women feel confident making investment decisions.

This lack of confidence may in part be the legacy left behind after years of investing being presented as a fundamentally masculine environment. Or perhaps, some of us have just switched off as investment advertising has failed to engage us, indeed 84% of women feel misunderstood by investment marketers.

Celebrating the role women now play in financial planning and money management can all have a positive impact. For example, one of our clients is a young woman who is using property-backed lending to save for a deposit on house – one of the biggest challenges faced by the young today. Highlighting positive role models like this may go some way towards breaking down this myth that men have a better idea of what ‘investing’ is all about compared to women.

Digestible, accessible information

Another element in engaging more women is around how information is presented. Women surveyed in the britainthinks.com research we mentioned earlier felt that much of the language used in finance is inaccessible, full of confusing language and unnecessary jargon.

Having access to information that is presented in a digestible format without being patronising, may help engage us and in turn get more women considering alternatives to high-street savings accounts. There are some helpful websites out there that that aim to ‘demystify’ investing and present information in a straightforward, jargon free format such as Boring Money. It would be good to see more information like this readily available.

Understanding Risk

Many women still view investing as too risky and an unnecessary gamble. Investing is often viewed as something that should be looked at in the short term and only if you have ‘spare cash’ to play with. One of the key issues to address is around how 'risk' is perceived.

Risk is part-and-parcel of investing but there are levels of risk, elements of which can be controlled through knowledge and informed decision making. Conveying this message in a clear, tangible format could help address some of the concerns that surround investing in terms of financial security.

Debunking the myth that investing is ‘just for men’

“When you look at trading stocks etc, it’s a male orientated industry. So, when it comes to investing, men know a bit more than the average woman” Participant comment from britainthinks.com - Women and Investing

Ultimately, it comes down to us all working towards debunking this idea that men are in some way ‘better’ at investing than women. Access to jargon free information could help build confidence through knowledge. In addition, investment and finance companies taking time to review how they communicate their messages could help open the door further.

Just like any other financial decision we make, investment decisions should come down to our own individual financial priorities and have nothing whatsoever to do with our gender. If I revisit our own client base in a year, 5 years, or 10 years, it will be interesting to if there has been a shift towards a more balanced reflection of society as a whole – here’s hoping.

*Warning: nothing in this article should be construed as advice. Your capital is at risk

About BondMason

BondMason, the UK’s leading Direct Lending specialist, makes it easy for investors to target gross returns of 8%+ p.a. by enabling clients to invest in Direct Lending the smart way.
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