Gender differences lead to fewer women investing – how to close the gap


Just over one in every three ISA and HL shares is held by women.

But women have more financial power than ever. We are expected to own over 60% of the UK’s overall wealth by 2025.

So why is there a gender investment gap? And above all, what can all women do to shut it down?

While this article can provide helpful investment advice, it is not personal advice. If you are unsure whether something is right for you or how to get the most out of your investment goals, we suggest speaking to an expert, such as a financial advisor.

Problem # 1 Women save, but don’t invest

Women make excellent savers.

For example, we pay more Cash ISA accounts than men. But fewer of us add money to stocks and ISAs.

It is not easy to address the underlying reasons why more women are not investing. But there are common themes that generally lead women to favor cash.

For women who invest, confidence isn’t always an issue. However, for women who are not yet, the confidence chasm can turn into a lack of self-esteem and a general reluctance to take risks.

Ultimately, lack of self-confidence (and financial industry jargon) can lead to more cautious investment decisions. Which usually equates to not investing at all.

Solution # 1 Increase your confidence in your money

If women are unwilling to take risks and the investment is only seen as a “risk”, we are more likely to avoid it altogether.

Investment risks cannot and should not be ignored. When you put your money on the stock market, the value can go up or down and you can get back less than what you put in. There are ways to lower your risk while building confidence and momentum.

1. Start small. You don’t need to put large sums of money in an investment account every month. You can start with just £ 25 per month in an HL Stocks and Shares ISA.

Learn more about ISA stocks and shares

2. Think long term. By investing for long periods of time, your money is more likely to weather financial storms, such as market downturns. Remember though that you are not “stuck” with an account like Stocks and Shares ISA. You can withdraw your money if you need to.

3. Explore the bottoms. Let’s face it, not everyone wants to spend their time researching stocks or individual stocks. A fund manager can do this for you. They will divide your money between different companies, markets or geographies. It’s all about diversification and can help you manage risk.

Learn more about investing in funds

Problem # 2 Women face financial gaps that men don’t face

It may seem obvious, but the individual financial gaps that women face also impact the investment differences between the sexes. Here’s how:

The pay gap – For full-time employees, women in the UK were paid 7.4% less than the average man in April 2020. And we tend to spend more, what is colloquially referred to as the ‘pink tax’ “. While not a real tax, real-world data shows that women pay more than men for certain daily essentials like toiletries.

The impacts of Covid have also affected women disproportionately, with almost half of women living in London alone seeing their disposable income decline. For some, a lower salary and higher living expenses may mean a lower likelihood of putting savings into an account designed for the long term.

The maternity sentence – Less than one in five women who return to work after the children start doing so full time – we will earn even less. Add in additional costs like child care and it’s no surprise that women face an investment disparity.

Solution # 2 Invest in your future

  • Think about what salary you want and compare it to the salary you currently have. Investing a portion of the difference each year could mean that you can actually pay yourself the difference in the future.
  • If you receive a work premium, consider using it to supplement your professional retirement. You may be able to forgo some or all of your bonus in exchange for a pension contribution, and you will save tax.
  • If you’ve taken a career break in the past six years, you might consider paying voluntary national insurance contributions to increase your state pension when you retire. If you find that even with voluntary contributions, you will not reach the minimum 35 years of eligibility to receive the full amount, you may consider saving for a pension yourself to make up for any deficits. Our HL self-invested personal pension is an option. Anyone can contribute to your pension for you and the government will top it up by £ 25 for every £ 100 you contribute (contribution limits apply).

When you add money to a pension, you usually can’t access it until you’re 55 (57 from 2028). Tax rules can change and the benefits depend on individual circumstances.

Learn more about the HL SIPP

Problem # 3 Women don’t talk about money

Eight out of ten women say they do not talk about money with those close to them. Half of British adults think that talking about money is a bigger taboo than talking about their intimate relationships, religion or politics.

Fear of rejection or judgmental thoughts of others can keep us from opening up. But when we talk, we make better financial decisions, have stronger personal relationships, and feel more in control.

Why two brains are better than one to invest

Solution # 3 Break the financial ice

Start having open conversations with friends about saving and investing. You can start by mentioning the goal and how you achieve it. You may find that this also prompts them to share their own financial goals with you.

Likewise, you can talk to your partner about your short, medium, and long term financial goals, as well as budgeting and how you share the money and pay the bills. If your partner is generally more interested in investing, you might suggest managing your own family fund portfolio.

Finally, if you have children, grandchildren, or young family members, talk to them about money. They will make good money habits from what they see you doing.

Encourage older children to meet their own savings goals and help them understand your budget and spending. Don’t be afraid to explain when things go wrong, either. Recognizing that this is happening, your children might feel more confident to come see you in the future if they are feeling anxious about money.

Closing the gender investment gap

Closing the gender investment gap is in the hands of women. We are committed to empowering women to invest with confidence, giving them the tools you need to close the investment gap.

Sign up for Financially Fearless and join a growing community of women taking charge of their financial future.

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