If I gave you £10,000 to invest, what would you do with it? Don’t get too excited, because I don’t have £10,000 to spare! But I wonder whether your first thought would be to put it in a savings account or to buy shares? Men and women often have different ideas about money and women are generally more cautious about investing.
Where the differences lie
Women tend to prefer saving to investing and prefer to save for short term goals. This is the finding of surveys such as those carried out by banks (HSBC and Lloyds bank do them from time to time), pensions providers (such as Scottish Widows) and it was backed up by findings from our own SavvyWoman Women & Money report in 2014.
- Almost twice as many men as women said they’d be happy to invest all or most of a £100,000 in stocks and shares. Only one in eight women (12%) said they would consider share-based investments, compared to one in five men (21 per cent).
- This gender difference narrowed between 18–34 year olds, with 13% of women saying they would invest in stocks and shares compared to 18% of men. However, among women in their thirties and forties, the appetite for risk had diminished with only one in ten (10%) saying they would invest in stocks and shares, less than half the percentage of men who would invest (21%).
- More than one in ten women aged 55+ (13%) said they would put their money into share-based investments, compared to 24% of men. The majority of both women and men said they would put some or all of the money into cash ISAs or similar savings accounts (35% of women and 36% of men). This answer had the smallest gender difference across all age groups.
Amount saved – women v men
Research over the years finds that normally save less than men and a combination of factors come into play; women earn less than men on average and for those who have children and give up work to look after them, paying into savings or investments is often one of the first financial sacrifices that’s made.
SAVVY TIP: Does this sound like you? Do you start saving but dip into your savings regularly? If so, make it harder to get to your money. I’m not a fan of notice accounts for emergency money. But if you’re struggling to build up your savings and you have some cash for car/boiler repairs etc, choose a notice account where you’d lose interest if you withdrew money without giving the notice you need (it’s often 30 or 60 days). Or at least pick an account without a cash card.
Women and investing
Women are often said to prefer cautious investments. Some women are very comfortable putting their money into stock market-based investments but many prefer savings accounts or things like bonds, which can be (but are not always) lower risk.
SAVVY TIP: There’s nothing wrong with being a cautious investor and how you feel about risk is very personal. If you do some research and then decide it’s not for you, that’s fine. But just make sure you don’t dismiss investing out of hand without finding out more about it. It doesn’t have to be all or nothing, you can start investing small amounts – as much as you feel comfortable losing – until you’ve got used to the idea.
On the plus side, women do tend to manage their investments well. When women do actively invest they can generate as good a return, if not a better one, than men.
SAVVY TIP: This is why it’s not a good idea to dismiss investing. When women do invest, research shows women tend to outperform men. That’s because we tend to do more research than men and don’t waste money by buying and selling shares unnecessarily.
Women and pensions
Women still tend to retire on less than men. That’s likely to improve in years to come as women earn more and the gender pay gap starts to close. The bad news – for our finances – is we also retire earlier than men and live longer after retirement. So even if we save as much, it can mean a lower amount every year.
SAVVY TIP: It’s depressing to think that we’ll need more money to have the same standard of living in retirement as men. But – sadly – it’s the truth. If you’re married or in a relationship you and your husband or partner may plan your retirement savings between you. But if you’re on your own, it’s down to you to make sure you save enough.
Some women prefer not to save in pensions. Some – although not all – women are wary about tying their money up in pensions for the long term. Although it’s definitely not a good idea to lock money away if you need access to it, you shouldn’t dismiss pensions out of hand.
SAVVY TIP: The rules state that you can’t access money in a pension fund before you reach your 55th birthday. If that worries you, you can always start saving in an ISA (a cash ISA if you think you’ll need the money in a few years time and a stocks and shares ISA if you can leave it for ten years or more) and then transfer it into a pension later on.
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