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Written by: Sarah Coles | Hargreaves Lansdown
- 62% of HL stocks and shares ISA clients are men*.
- 65% of women are not prepared to take a risk with investment. This rises to 79% of women aged 55 plus.
- 42% of women don’t want to lose money – rising to 49% among those aged 55 plus.
- 63% of women say they don’t know much about investing.
- But those women who invest in an HL ISA on average hold more in their investments than men*.
- 49% of women who invest are doing so for retirement and 35% for income.
- 31% started investing when they had enough money.
- 25% started investing after receiving financial advice.
- 22% invested after being encouraged by family or friends.
Results from a survey of 7,500 savers and investors by Opinium for HL’s Financially Fearless report on Why Women Invest, February 2024. Why Women Invest Report | Hargreaves Lansdown (hl.co.uk)
*HL client data
For women, getting to the investment starting line involves an obstacle course in itself. We earn less on average, most of us weren’t taught about investment – either at home or at school, and there’s a risk many women just don’t feel part of the investment world. But there is hope, because women who have clambered over those obstacles and started investing can help reveal some of the secrets of getting started.
The barriers
Part of the problem women face is a simple lack of money to invest. They earn less than men on average, so some will be struggling to build a cash emergency fund, let alone start investing. Just over a quarter (26%) say they don’t earn enough to invest, and two in five (38%) say they don’t have enough spare money. However, our research shows that this is far from the full picture, because one in three women have at least £20,000 put away – so there’s more to it than a lack of available cash.
The gap owes something to the fact women don’t feel they have ever had a chance to learn about investment. Only around a third (36%) said their family educated them about investments and fewer than a fifth (19%) said their school helped. It means taking advantage of investments often means making your way in adult life.
Women face cultural barriers here too. Two fifths of women say society often presents investing as something for men. We’re seeing a generational shift in this kind of view, and 87% of women agree we’re more empowered to make decisions about our finances and investments than previous generations. However, there’s still a long way to go.
The financial industry has a role to play here, because it’s not always easy to make a start. Two thirds of women say financial jargon makes things harder, while others find it too dry, and still more are put off by risk warnings. Partly as a result of this, 40% of women say they’re not interested in investment.
Difficulty in getting to grips with information about investments means a fifth of women (22%) say they don’t know anything about investing, a fifth (21%) don’t understand investments or think it seems too complicated and a fifth (19%) do not know how to start.
However, this isn’t a simple lack of understanding. When we asked a series of questions about investment, a large majority of women got the answers right. So, for example, 97% knew investments could rise and fall in value and 91% knew that the greater the return you want, the more risk you usually have to accept. It means a major factor is the feeling we don’t know enough – rather than actually lacking the knowledge. Closing the investment confidence gap is a big part of the solution.
Why women invest
Those women who do invest haven’t been completely alone when they overcame the confidence gap and picked up knowledge. One common theme was working with someone else. This helped for the quarter (25%) who started investing after getting advice and the fifth (22%) who invested after being encouraged by family or friends.
Building their confidence was often the trigger, with a fifth (18%) saying this tipped them over the edge into investment. In some cases, this simply came down to committing some time to learning about investment. A fifth (18%) said finding out more information persuaded them to start, and one in seven (14%) said having the time to research made the difference. It can often help to make a small start with a diversified fund, and learn as you go along. A small investment will make the stakes low enough to persuade investors to start, while having an investment can help keep you engaged.
It can also help to focus on the reason for investing. In many cases women have been persuaded by the fact that simply by being female (and having a longer life expectancy) means you’re likely to need more income in retirement. Taking control of your investments – inside and outside pensions – can help you hit your goals much more effectively. Of those women who invest, 49% are doing so for retirement and 35% for income – which is often in retirement.
Some women are investing for family reasons. Almost half (45%) of women agree that women save and invest with their family in mind. Of those who invest, quarter want to provide an inheritance (25%) and an eighth (12%) want the money for something specific to help their children or grandchildren in life.
Others will invest after a major life event, like bereavement or divorce, when they have the money to invest. And while it’s perfectly understandable, because it may mean you have a lump sum for the first time in your life, you may not necessarily be in the right mental place to get to grips with investment for the first time. It’s a good idea to make a start with regular investments, so if you inherit a lump sum or agree it in a divorce settlement, investing is already something you’re very familiar with.
Related: New Era of Female Financial Empowerment Has Arrived