Baffling jargon, machismo, gambling and a boys’ club: this is what springs to mind when many people think about investing in the stock market.
These stereotypes are the reason why investing has become the financial equivalent of the weights section at the gym — a place where few women go, even though they would likely benefit.
Women are diligent savers and have more money saved in cash than men — impressive given that, although everyone faces challenges in building a financial safety net, for women it’s often tougher.
The gender pay gap has widened since the pandemic began, to 7.9% last year from 7% in 2020, as more women were put on furlough and industries with a majority female workforce such as retail have been changing, with shoppers increasingly buying online.
Many women pay a ‘motherhood penalty’, too, which is the lower earnings and fewer promotions that tend to follow parenthood, often due to mums working part-time when their kids are young.
Despite these challenges there are almost a million more women with money stashed in an Isa than men. This penchant for saving is a lifelong habit, as more women have cash Isa savings than men in every age group from 18 to 80.
The difference is especially pronounced in the 25 to 34 age group, showing young women are committed to saving for their futures from the start of their careers.
The amount women are saving is also impressive, tucking away more money in Isas than men in almost every pot size, from the smallest savings (£1 to £2,499) to the larger pots of £25,000 to £49,999.
The only exception is when you look at which gender has most of the Isa savings pots worth £50,000 or more. It’s the only category where women are under-represented — reflecting that most of Britain’s wealthiest individuals are male, but probably also how men are more likely to invest.
There are 25% more stocks and shares Isas held by men than women. When it comes to growing your wealth for the long term, cash isn’t king.
Inflation erodes the buying power of cash over time — think of how a chocolate bar cost 30p in the 1990s, but would now be more like 90p. The same thing will likely happen to £30 left in a cash account today; in 40 years that probably won’t buy you a sandwich.
So more women need to be investing. It can be a way to increase a savings pile over many years, although don’t forget that it comes with the risk of financial loss.
Many people think that you have to be rich to have stock market investments, but actually anyone with a pension has money invested. Online investment managers allow people to invest with just £50 a month, and unlike the weights section at the gym, you can do it from your sofa.
Spread the word: women are good with money and know how to save. But cash isn’t always the best choice.
Those who have saved an emergency fund of three to six months’ expenditure and have some extra savings could find a stocks and shares Isa is the way to grow their wealth.
Annabelle Williams is a personal finance specialist at Nutmeg.
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