It took over 800 years for Britain to announce its first female chancellor, dating all the way back to England’s first top finance minister – Henry the Treasurer – a wealthy landowner who served William the Conqueror after his invasion of 1066.
Across the Atlantic, the US may be on the brink of reaching a similar feat, as Kamala Harris battles Donald Trump to become the very first female President of the United States.
We still have a long way to go, but these achievements hint that some glass ceilings are beginning to crack and inspiring, entrepreneurial women are taking positions at the very top of politics. But what about economics, and, more specifically, investing?
The Investment Gap
Traditionally, women have been less likely to invest than men, which has serious financial repercussions. By the time a woman reaches the state pension age of 67, she will have an average pension savings of £69,000. This is £136,000 less than the average man, who will have saved £205,000. This is particularly concerning, as women tend to live almost 4 years longer than men on average.
In 2020, only 48% of women had money invested in the stock market compared to 66% of men. This disparity can be attributed to several factors, including lower income levels, less disposable income, and a prioritisation of immediate financial security over long-term investments.
Changing Trends: The Rise of Women Investors
The tide is turning, and women are beginning to invest in bigger numbers. A 2021 study by Fidelity found that 67% of women are now investing outside of their retirement accounts, up from 44% in 2018. Younger women are leading the charge, with 71% of Generation Z women and 63% of millennials investing.
This is fantastic news for not only women in finance, but economics as a whole. An estimated $700 billion could be unlocked by financial institutions by better serving women as investors. Moreover, if women invested at the same rate as men, an additional $3.22 trillion of investment capital could be unlocked globally.
Outshining the Competition
Despite men investing more than women, it is women who outperform their counterparts in the markets. Studies show that women on average achieve better results than men, with differences ranging from 0.4% to nearly 1%. However, individual results may vary, and it is important to approach investing with a well-informed strategy.
Ironically, it is their more cautious and long-term approach to investing and finances in general – a trait that prevents many from investing in the first place – that empowers them to be savvy investors. Women are less likely to trade frequently and hold an asset for the long term, which can often lead to more stable and consistent investment growth.
Conclusion
As gender equality advances, more women are taking control of their finances and reaping the rewards. With increasing opportunities to invest, it’s crucial for women to leverage the expertise of trusted Wealth Managers to maximize every pound.
Interested in Investing?
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Sources:
- Women and Investing in 2024: Where Women Win | The Motley Fool
- International Women’s Day: closing the savings and pension gender gap | Money and Pensions Service (maps.org.uk)
- Why do fewer women invest than men? | This is Money
- uk median retirement account balance women compared to men - Google Search
- Women are poised to reshape the financial services industry | World Economic Forum (weforum.org)
Author
Poppy Fox
Investment DirectorWomen and investing
Exploring the key ingredients for successful investing and how we can help you on your investment journey.