Gender gap in investments

When it comes to money matters there’s a serious gender disparity in who invests and when they start.

The fact is that men are more likely to invest than women.

Yet women do have the means to invest. There are approximately 13 million UK adults (many of which are women) who have £430 billion sitting in savings accounts⁽¹⁾, over and above what they need for emergencies and shorter-term financial goals. This is money that could potentially be invested to help grow their wealth over the longer term.

At Barclays, of customers with a savings balance of more than £20,000, 55% are women. Yet those signing up to Barclays Smart Investor are overwhelmingly male with 69% men and just 31% women.

So while many women are in the strong position of having enough savings to consider investing, they are less likely than their male counterparts to get invested.

Analysis of investing patterns shows that among those women who are investing with Smart Investor, on average it takes them four months from the point at which they consider investing to opening an investment account – one month longer than men.

In the extreme cases, 10% of female investors say they waited over a year to start investing – that’s almost double the figure for men, which stands at 6%.

Considering that women tend to live longer than men by 3-4 years⁽²⁾, it is crucial they ensure their money is working as hard as possible, in order to achieve their financial goals and long-term financial security.

“Known barriers to building up a meaningful investment portfolio include confidence and risk,” said Clare Francis, Saving and Investment Director at Barclays.

“A big part of investing is about building confidence through research, education, and learning. There are plenty of resources available via Smart Investor which may be used to ultimately help build on this.”

Risk – inherent in investing – can cause many to hesitate when planning to get invested. “While taking risks might feel daunting, understanding what risk means when investing – and how to manage it – can help you decide the level you are prepared to tolerate. Risk should be viewed in context of your objectives, which means looking long-term and not factoring in short-term, weekly moves in markets,” explains Clare.

Studies have shown that once women do take the plunge, they have proved to be excellent investors.

A Warwick Business School study for Barclays⁽³⁾ previously revealed that women who invest generally achieve better returns than their male counterparts, outperforming them by 1.8 percentage points over three years.

While there were significant differences between the genders - women, for example, only traded nine times a year on average, compared to 13 times for men.

The biggest difference, and the one that impacted their returns, came in their appetite for the type of investments they chose. The study said that female investors were less likely to indulge in the "lottery style" of investment that appealed to men, according to the research.

The Warwick Business School analysis defines "lottery style" investing as a tendency to invest in more speculative, lower priced shares that might increase in value substantially, along with a desire to keep to shares that show a loss while selling off their winners – the ones that have actually increased in value.

Many women who invest with Smart Investor favour our Ready-made Investment funds which invest in a range of assets, regions and sectors. Our analysis shows that when young women (18-24) invest through Smart Investor, Ready-made Investments are their most popular choice.

You don’t need to be an expert yourself because our investment team create and manage the funds. There are five to choose from and all are designed to provide a core portfolio holding.

For women that are yet to regularly invest, there are several steps they can take to help boost their confidence and manage risk.

Drip-feed small amounts into the stock market every month, making regular investments to benefit from what’s known as ‘pound cost averaging’. The idea is that you buy more shares when prices fall, and vice versa, which may help to smooth out stock market volatility over the long-term.

However, beware that this strategy doesn’t always work and sometimes it may not produce as optimal results compared with investing a lump sum at the beginning. It’s also important to ensure that it’s cost effective, however, to invest very small amounts, accounting for the charges applied on each investment.

Hold a broad spread of assets, which include cash, shares, fixed-income investments, and property can also help, as it means you’re not relying on one type of investment too heavily. The hope is that if one part of your portfolio doesn’t do so well, your other investments may fare better, making up any losses.

Consider Barclays Ready-made Investments, designed by our experts. There’s a choice of five funds, which all invest in a diversified portfolio of shares, bonds and cash by buying other funds which focus on very specific types of these assets. The amount invested in each will determine how much risk the fund will have. You can invest from as little as £50 a month.

You can then leave the rest to us, knowing that it's being managed according to your chosen level of risk and that it’s giving you global diversification – in other words, exposure to companies all over the world.

Ready-made Investment funds can be used as a core holding to get that peace of mind that your investments are diversified. You can then use other investments as add-ons to get exposure to any particular region or market you like.

Remain focused on the long-term by investing for at least five years, but ideally longer, for the greatest potential gains. This will also help you avoid the temptation to panic and sell when markets are turbulent.