Research shows women are less likely to invest than men – and this could put them at a financial disadvantage.
The gender gap we usually think of relates to differences between the salaries paid to men and women by UK employers. But there is a similar problem when it comes to investing money for the future. After a survey of 6000 UK adults in 2022, Boring Money estimate that only 40% of investors are women. This is a slight decline from 2021, when it was 41%.
If women are less likely to invest, they could face further disadvantages in the long term. They may find it harder to be financially independent and could be more likely to face financial difficulty in old age because their pension savings are lower than men’s.
There are a number of factors underpinning the gender investment gap. Clearly, lower average rates of pay is one – but there are other issues. Women engage less with investment providers than men and, in general, have an aversion to risk taking.
But failing to invest can itself be risky. In an economy where savings interest rates are lower than inflation, holding spare money in cash – whether in a current or savings account – means that your capital could end up losing value in real terms.
Of course, it is important to keep enough funds in an easy-access account for day-to-day spending and emergencies.
Long term gain
On the other hand, once emergency savings are taken care of, putting money into investment funds could give the opportunity for greater returns. Investing over the longer term – usually at least five years, gives investments the opportunity to grow and overcome bumps in performance.
In the past, stock markets have almost always outperformed cash over long periods. However, it is important to remember that past performance does not give an indication of future performance and cannot be taken as such.
Greater financial security isn’t the only reason more women should consider investing; Boring Money also found a link between greater financial independence and higher levels of self-esteem.
Easy does it
Another issue that puts off many would-be investors – both men and women – is the perception that investing is complex. With so many different types of investment options to choose from – ranging from company shares to government bonds and even commercial property – making a start can be daunting.
Weighing up the risk
Royal Bank Invest has a straightforward range of Personal Portfolio Funds, which are all ready-made and have differing levels of risk. The defensive fund, for example, contains a greater proportion of assets such as bonds, which tend to be less volatile. This means that, while there may be less scope for bigger returns compared to the adventurous fund, the chances of losing money could be lower.
Of course, the value of your investments can go down, as well as up, and you may not get back all that you invest, so it is an important point to consider when investing. Putting cash into a fund with a range of assets could be a good way of managing risk.
You don't need to have a big lump sum: an account can be set up with Royal Bank Invest with an initial lump-sum payment of £50, or by choosing to pay in from £50 a month.
Another factor to bear in mind is the potential benefit of holding investments for as long a period as possible – so by starting early, even if you are only putting aside a small amount every month, you could increase your chances of a sizeable nest egg.
Get started with Royal Bank Invest
You’ll need to be a Royal Bank customer with Digital Banking, aged 18 – 84 and a UK residence for tax purposes.
Click “Continue” to log into the Royal Bank Invest portal.
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