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Written by: Emma Wall | Hargreaves Lansdown
- Women are not investing because of lack of money, knowledge and trust
- Just 25% of women across all age groups invest, compared to 37% of men
- Women are most likely to invest as pensioners – but still lag their male counterparts
- The ‘squeezed middle’ generation of women (aged 35-64) are trailing the most. They are investing the least at 19%. In comparison, 36% of middle-aged men are investing
- But these women are most open to investing than the other age groups. A huge 84% of young female non-investors say they could be persuaded to invest
Women are failing to invest as much as their male counterparts – at risk of creating a permanent gap in their financial health and wealth. Only a quarter of women are investors, compared to four in 10 men. The number one blocker to investing is lack of money – women across all age groups stating that if they only had more, they would take the plunge. Of those that are investing, the majority are in their older years, aged 55 plus, prompting the question are we leaving it too little, too late? A third of these women surveyed have an investment, which could include a stocks and shares ISA, investment funds, and company shareholdings – but does not include cash savings. However, this is still less than men in the same age bracket, where 43% of those surveyed are investing in some way. For this age group as well as not enough cash, it is additionally a lack of knowledge in investments that is putting them off.
While those choosing to invest should be encouraged, we know that the length of time you invest for is one of the biggest drives of returns, the investment adage that it is time in the market, rather than timing the market, holds true. It is worrying analysis therefore that shows the ‘squeezed middle’ generation of women aged 35-54 are trailing their male counterparts. They are investing the least of the age groups surveyed at 19%, while in comparison, 36% of similar aged men are investing.
It is in your thirties that women typically face the biggest financial challenges – house purchase, high bills, low wages and – if you choose to, child-rearing. Children are rewarding in many ways – but rarely financially. Time out of work for childcare means less income, and ability to contribute to short and long-term financial goals – including much-needed pension contributions. The gender pay gap bites for those that are in work – the average pay gap is 9.4%, no improvement on 2017 when reporting requirements first came in. And for the public sector this breaks down to a much higher average pay gap of 15% compared to the private sector’s 8%. Lack of money is cited as the largest reason not to invest for this age group, though a massive 84% of this age group said they could be persuaded to invest – if they had more knowledge, and – for one in five – a financial adviser.
But there is hope! Younger women aged 18-34 are bucking the trend, with 23% of them investing, closing the gap on their male peers of which 31% invest. It is just as well they are putting the cash away; according to the Office of National Statistics 65-year-olds today should expect to live for around another 20 years, while those aged in their 20s and 30s now should live past 100. And these Gen Z and Millennial women are less concerned by lack of knowledge, trust or time than other age groups – nor do they place much importance on financial advice or market volatility. As a popstar too old for this cohort to remember sang – ‘it is all about the money’.
Related: Why Advisors Should Focus On Women: Smaller Debt Burdens