Reckless caution? Why do so many fewer women invest?


More men invest than women. This may not be a revelation, but that should not make it any less troubling.


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According to the most recent official figures in the UK, only 43% of stocks and shares Individual Savings Accounts (ISAs) in 2016-17 were opened by women. Yet more than half of all cash ISAs – 55% – were.

This contrast shows that, despite the persistent gender pay gap, it is not simply an issue of men having more money to set aside. It points instead towards a greater willingness among men to translate their savings into investments.

Most surprisingly perhaps, this disparity exists across all age groups, even among millennials – the generation that reached adulthood in the early 21st century. If anything, the difference is starker: among under-35s, twice as many young men invest through an ISA than women.

Competing theories

So, why do fewer women – young and old – take the leap and invest their savings for the future, compared with men?

There are competing theories, as you would expect, but perceptions are often cited as a factor. Historically, the global investment industry has been predominantly run by men, arguably for men. Times may have changed, but reputations are hard to shake off. Providers are also open to criticism that they have historically targeted men, however inadvertently or implicitly.

Then there are structural factors in society to consider. Despite more balanced rights and responsibilities among spouses, gender norms and inequalities prevail in various guises. Among these is the greater tendency for women to put careers on hold, either partially or entirely, to look after children. While this often reflects disparate maternity and paternity rights as much as anything else, it has an inevitable bearing on salary growth and pension pots.

It has been argued that this often culminates in a lower sense of financial independence that is then reflected in a tendency to hoard cash savings, and a reluctance to take on investment risk.

Caution could be reckless

Irrespective of why more women prefer not to invest their savings, it matters. This is because, put simply, being too cautious with your long-term savings means you run a greater risk of not having enough money to meet your needs or realise ambitions.

In one sense, of course, cash is unquestionably the safest place to store your savings. Unlike stocks and shares or fixed interest investments, which are all less secure, up to £85,000 of your money is secure in a bank or building society through the Financial Services Compensation Scheme.

However, over the long term, relying entirely on cash carries dangers. This might seem counterintuitive, but think about the effects of inflation – the rate at which prices rise over time. Unless the rate of interest that you get exceeds the rate of inflation, the real value of your cash savings, in terms of what they can be used to buy, will fall over time.

By putting some of your long-term savings to work through investments, you can aspire to achieve much greater returns. This always involves accepting the chance of losing money, of course, but we should never confuse the fluctuations in value which are part and parcel of investing with the risk of permanent losses. If your investment horizon is years in the future, you should be able to ignore the day-to-day gyrations in market prices that, over time, are rendered less relevant.

Remember, the value of investments will go down as well as up and you may get back less than you originally invest.

Past performance is no guarantee, but…

…there is no shortage of studies that have in fact found women to be more successful at investing than their male counterparts.

Research by the University of Warwick  concluded that female investors exhibited a temperament better-suited to long-term investing. By tending to take a more balanced and less impulsive approach than men in the study – avoiding speculative investments and trading less often – their returns were almost 2% a year higher on average.

The point here is not that women should pile their money into investments (or that men shouldn’t). Instead, the lesson should be that investing is accessible to all of us, and can play a valuable role in helping us achieve our long-term goals.

Important information

The views expressed in this document should not be taken as a recommendation, advice or forecast. We are unable to give any financial advice. If you’re at all unsure about the suitability of any investment, please speak to a financial adviser.

If you do not already have a financial adviser you can find one here.