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How women should be investing

How women should be investing
How women should be investing

That got you clicking, didn’t it?

But if you’re expecting to read about how women make worse investors than men because their deeply-rooted risk aversion means they find market volatility terribly scary, you’ll be disappointed.

(Or, indeed, that women’s in-built loyalty means they hold on to stocks for longer and makes them better investors.)

I won’t be writing that, because most of the reported differences between male and female investors’ psyche is unproven and there are always exceptions to the so-called rules.

Just look at Cathie Wood, for example – chief executive of disruptive technologies firm Ark Invest. Many of her investments sound like they come from a Terminator film; there’s no volatility aversion there.

Cathie Wood,  chief executive of Ark Invest, has little volatility aversion – which stereotypes claim plague female investors
Cathie Wood, chief executive of Ark Invest, has little volatility aversion – which stereotypes claim plague female investors - Brendan McDermid/REUTERS

What is proven to make the biggest difference between men and women investors – and the size of their pension pots – is not attitudes to risk, but socioeconomic factors.


The impact of high childcare costs, gendered divisions of labour at work and home, and the gender pay gap all compound to create the gender investment gap and the gender pension gap.

Only 28pc of women are investors, compared to 45pc of men, according to a survey Opinium conducted on behalf of Hargreaves Lansdown (HL) last year.

The number one blocker to women investing is not confidence, knowledge, or fear, but lack of money. Women across all age groups surveyed stated they’d take the plunge if only they had more.

It is in our thirties that most of us face the biggest financial challenges – whether that’s a house purchase, high bills, low wages and, if you choose to, child-rearing.

Children are rewarding in many ways – but rarely financially, and the bulk of the fiscal hit is still mostly taken by the mother.

Time out of work to provide childcare means less income and less ability to contribute to short- and long-term financial goals including much-needed pension contributions.

Many women who then return to work part-time, or after a longer period out, find their salaries are impacted as a result.

The gender pay gap currently stands at 14.3pc according to analysis of pay data by the Trades Union Congress (TUC), meaning at current rates it would take at least another 20 years to close.

The gender pension gap sits at 40.5pc.

The Opinium survey revealed that it was the “squeezed middle” generation of women aged 35-54 who had the largest divergence from male counterparts, with just 19pc investing compared to 36pc of men.

HL’s Financially Fearless ‘Why Women Invest’ report released this March also revealed that attitudes in the childhood home had a large impact on whether women grew up to be investors.

Fathers are still more likely to talk to sons about money, markets and wealth.

Unsurprisingly, women who grew up openly discussing investments with their family were more likely to become investors themselves.

However, change is happening.

Women are creating wealth faster than any other period in history and it is estimated that 70pc of global wealth will be in the hands of women within the next two generations.

In 2019, 23.3pc of households had a female breadwinner versus 19.8pc in 2004 and 89pc of women say they have their own money – which is unlike previous generations.

How should women invest?

The first point is obvious: if you can invest, do.

The adage is true, it is not timing the market but time in the market which has the biggest contribution to positive returns.

Prioritise your pension – particularly if you are employed.

The earnings threshold for automatic enrolment is £10,000, but if you earn more than £6,240 then you can ask to be enrolled in your workplace pension scheme and benefit from a top-up from your employer.

Women are still more likely to work part-time and multiple roles than men, so it could be that you have not hit the auto-enrolment threshold, but are still entitled to a workplace pension.

If you’re not currently employed, you won’t be able to benefit from a workplace scheme, but you can still consider your retirement income.

Make sure you’re receiving any National Insurance credits you’re eligible for (such as if you can receive child benefit).

If your husband or partner is working, consider topping up your National Insurance contributions from their salary.

Gaps in your National Insurance record could mean you will not have enough contributions to get a state pension.

Similarly, consider making a Sipp (self-invested personal pension) provision from household income.

This can be set up with a lump sum and topped up on an ad hoc basis, or contributed to monthly as you would a workplace pension in employment.

Another quick win – literally – is to know that investing does not have to take lots of time.

The Why Women Invest report found that some women perceived investing as too time consuming to fit into their already busy lives.

But it also revealed that two-fifths of women spent less than 30 minutes managing their investments each month, and a further 27pc spent between one and two hours.

Tech has a huge part to play here. Having the ability to check your investments on your phone while you wait for a bus has made investing more accessible and convenient for all.

Women’s priorities when it comes to investing are similar to men’s.

The Why Women Invest report showed that the top five concerns of women when choosing investments were returns, fees, the underlying holdings, the geography and who was managing the fund.

While these are important factors, they are only relevant in context; why are you investing, and what else do you already invest in?

Regardless of gender, understanding what it is you are investing for, when you expect to need the money and what biases already exist in your portfolio are as important – if not more important – than past performance.