Invest like a girl with Wealthify

by | Mar 8, 2021 | Articles, Saving

As we celebrate International Women’s Day, it’s time to talk about women and their money. It’s often assumed that women are bad with money, but this is a complete myth. In actual fact, women are really good at managing money. Around 55% of women say they’re the ones planning the day-to-day spending of the household versus just 31% of men1. And that’s not all, they’re also great at saving. In 2017/18, 3.6 million Cash ISAs were opened by women, against 2.9 million for men2.

However, there’s a financial playing field where women are still behind, and that’s investing. According to a YouGov Omnibus study, only one in five women hold an investment, against a third of men3. Another study found that women in the UK hold £14.3 billion in investments whilst men hold £29.3 billion – that’s a £15 billion difference4!

Many women don’t invest because they feel that they don’t have enough knowledge, or they find the idea of investing too risky. There’s a confidence issue at the heart of the gender investment gap – once again, women don’t believe they’re good enough to do it. And yet, if anything, evidence suggests that women tend to be good investors, and in many cases even better than men. A recent study, led by Warwick Business School, concluded that women outperformed the FTSE 100, the main UK stock market, by 1.94% whilst men outperformed it by 0.14%5. Perhaps, it’s time to start investing like a girl? Here’s what female investors tend to do well:

They do their research

When it comes to investing, research shows that women aren’t very confident. Only 13% of women believe they have a good knowledge of investments and the stock market, compared to 26% of men3. Lack of confidence can be a real obstacle in women’s financial lives, however, on the brighter side, this confidence issue also means that women are more likely to do their research when they decide to enter the world of investing. And this is a great place to begin. Whether you’re just getting started or have some experience already, it’s always important to do your homework and research countries, sectors and companies before making any investment decisions.

Obviously, going through balance sheets and keeping a constant eye on the news can be time-consuming, and if you can’t squeeze this research part into your busy schedule, that’s fine. There are many digital investment services, like Wealthify, that will do the hard work for you – from building and managing your investment Plan to monitoring markets and making adjustments to your portfolio to keep it on track.

They diversify their plan

Another thing women do well is that they diversify their investment plans6. In other words, instead of buying just one or two shares and running the risk of losing everything during turbulent times, women are more likely to spread their money across investment types (e.g. shares, bonds, and property) and regions. The advantage of diversification is that it helps mitigate risk, as poorly performing investments will be balanced out by the investments doing well. To diversify their plan, women tend to put their money in investment ‘funds’ – think of them as hampers full of many different investments. They’re managed by experts and allow you to spread your risk – something to consider if you’re just getting started.

They think long-term

When they invest, women tend to approach the whole thing with a ‘buy-and-hold’ mindset. Women see investing as a long-term commitment and they’re likely to stick to their investments for a number of years, regardless of market movements. In fact, even when markets go down, women are more likely to keep calm and remain focused on their long-term goals. On the other hand, men can show a bit more impatience when investing. Evidence shows that men are 35% more likely to buy/sell shares than women6. Trading frequently may seem harmless, but every time you buy and sell investments, you have to pay trading fees which will ultimately eat into your returns. So, by holding their investments over the long-term, women are effectively maximising their potential gains.

But that’s not the only benefit of thinking long-term. By remaining invested for the long haul, you’ll increase the odds of seeing positive returns. In fact, the longer you’re in, the better chance your money has to grow. People who invested in the FTSE 100 and stayed invested for any 10-year period between 1984 and 2020 have had an 89% chance of making a gain7.

In conclusion

The idea that women aren’t good at investing is simply a myth. They can make great investors – and in many cases, they can even be better than men. The issue here is that they often lack the confidence to even make the first step. Luckily, the investment world is changing and thanks to digital platforms, investing has become easy and anyone can get started. Co-founded by Michelle Pearce-Burke and named ‘Best Investment Provider’ at the British Bank Awards 2020, Wealthify is on a mission to inspire anyone, including women of all ages, to build their future wealth and they’re doing so by making investing as effortless as possible.

References:

1: https://www.royallondon.com/media/press-releases/press-releases-2020/january2/how-men-and-women-divide-the-household-money-chores-revealed—royal-london-research/

2: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/894771/ISA_Statistics_Release_June_2020.pdf

3: https://yougov.co.uk/topics/politics/articles-reports/2018/04/12/over-half-women-have-never-held-investment-product

4: https://www.prospectmagazine.co.uk/other/gender-wealth-gap-women-investing

5: https://www.wbs.ac.uk/news/are-women-better-investors-than-men/

6: https://newsroom.fidelity.com/press-releases/news-details/2017/Fidelity-Investments-Survey-Reveals-Only-Nine-Percent-of-Women-Think-They-Make-Better-Investors-than-Men-Despite-Growing-Evidence-to-the-Contrary/default.aspx

7: Data from Bloomberg

Past performance is not a reliable indicator of future results.

The tax treatment depends on your individual circumstances and may be subject to change in the future.

Please remember the value of your investments can go down as well as up, and you could get back less than invested.