Skip to content

Women face a difficult challenge when it comes to their finances; on average, they live longer than men but earn less.

It’s no mean feat to overcome this kind of headwind, with women earning, on average, £223,000 less than men over the course of their lifetime, according to the charity, Young Women’s Trust.

A solution to this is investing. Investing can help level the playing field, and research shows women are better at it than men, with Warwick Business School revealing women outperformed men by an average of 1.8% over a three-year period a recent study it undertook.

The only problem is, far fewer women actually participate in the financial markets than men. Statistics from HMRC show the majority of cash ISA accounts opened in recent years were by women, with men preferring stocks and shares ISAs.

This is an issue because returns on cash may well be lower than the official inflation rate (let alone the real inflation rate which people actually pay). This means women are running the risk of not only earning less, but in real terms, making a potential loss from the savings they’ve managed to build up.

In short then, there is an investment gap, despite the fact that women make up 51% of the UK population.

The reason women invest less

There is a wide range of reasons people choose not to invest, but research has revealed a common cause creating the investment gap in the UK is confidence.

Women simply don’t feel confident making financial decisions about saving, investing and securing income for the future, because they don’t feel they understand financial products well enough.

When decisions are made, the default approach is to be cautious, which can mean women are more likely to have cash ISAs versus investment ISAs.

In all, women can be left feeling like investing simply might not be for them, but we believe this perception can be tackled.

Taking control

It isn’t simple to make the changes needed and there are clear steps women and the wider investment industry can take to help change the status quo. Three such steps are:

Encourage participation

First, there needs to be a move away from waiting for women to ask about investing. Instead, investment conversations need to be focused on women, and made relevant to them and their lifestyles.

For this to happen, it’s important we invite female participation by pitching the conversation with the right tone and language in order to make it easier to join in.

Build a story

Women also need to be inspired to take an interest and that comes down to developing a narrative that goes beyond statistics. Women should feel a connection to the brand and the investment product that they are buying into.

Normalise investing

Finally, investing needs to be normalised. If we can make it a part of the day-to-day, in the same way as eating healthily or doing exercise, then it will become much more routine.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past or future performance indicators are not a reliable indicator of future performance. A stocks and shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek financial advice.