When it comes to earnings, unfortunately, women remain disadvantaged at every turn. And then there’s the gender investment gap. What is it and how can we close it? Check out our tips and advice for women looking to invest for a secure financial future.
What is the gender investment gap?
The gender investment gap refers to the disparity in investment participation and outcomes between men and women. Research indicates that women are less likely to invest in stocks and other financial assets compared to men.
According to a YouGov survey in the UK, 47% of men have money invested in stocks compared to 40% of women, and twice as many men (24%) as women (11%) say investing is their top financial priority.
It’s a similar story in the States where 48% of women invest in the stock market, compared to 66% of men.
Even when they do invest, women tend to hold more conservative investment portfolios, which may result in lower returns over time.
Why is there a gender investment gap?
The reasons behind the gap are complicated and wide-ranging, they include lower confidence in financial decision-making and limited financial education for women as well as patriarchal societal norms which have traditionally limited women’s access to financial resources and opportunities for investment.
The problem with the gender investment gap
The gender investment gap can have significant implications for women in retirement. Because women typically earn less, have fewer investment opportunities, and may invest more conservatively than men, they often have lower retirement savings and smaller pensions or social security benefits. This can lead to financial insecurity and a higher risk of poverty in old age for women.
The European Institute for Gender Equality’s Gender Equality Index 2020 reveals that ‘Older women are more likely than men to live in deprivation…. They are also more overburdened with housing costs representing more than 40 % of the total disposable household income (12 % of women, compared with 9 % of men). The gender gap in in-work poverty is also highest among women and men over 65 (11 % and 8 %, respectively).’.
On top of everything else, women tend to live longer than men on average, which means their retirement savings must stretch further, exacerbating the impact of any shortfalls in savings or investment returns.
Closing the gender investment gap is crucial for ensuring women have sufficient resources to support themselves in retirement.
Closing the gender investment gap
There is some good news when it comes to the gender investment gap – women are apparently ‘becoming the new face of wealth.’
According to McKinsey ‘An unprecedented amount of assets will shift into the hands of US women over the next three to five years, representing a $30 trillion opportunity by the end of the decade.’
At Infinity we are committed to playing our part in closing the gender investment gap and helping women to build wealth and achieve financial security and independence. We are always delighted to empower women to save and invest.
To that end, here’s some advice for women looking to enhance their financial well-being now and in the future.
Six things women can do to improve their financial wellbeing
Start saving
In fact, women generally make good savers. Certain studies show that when savings are adjusted to earnings women save a higher percentage than men. But, there’s no getting away from the fact that if you earn less, you have less to save.
While the economic challenges are real, women need to start prioritising saving. Automating savings is a key first step. Decide how much to save each month and have that amount transferred into a savings account as soon as you get paid and before you have the chance to spend it. At first, it may be tough, but it will get easier as you get used to not having those funds to spend.
Don’t play it too safe
It’s well documented that women tend to favour supposedly ‘safe’ options such as bank deposits. As ever, we’d argue that cash savings are not as ‘safe’ as they are generally perceived to be due to inflation-based erosion. To capitalise on savings over the long term, well-chosen investments in a diversified portfolio will produce a better return.
Over the last 100 years or so, stock market returns have averaged 10% annually with positive returns 70% of the time. Year on year that figure can vary, and even stray into negative territory, but history shows that over the long term, investing in the stock market will build your wealth.
Set clear financial goals
Financial planning starts with defining specific short-term and long-term financial goals, such as saving for retirement, buying a home, or starting a business. You’ll find some really useful information on goal setting here and our financial advisers would be happy to help you clarify your goals in a first step on the way to building sufficient wealth to achieve them.
Diversify your investments
While we are enthusiastic cheerleaders for investing in the markets, care needs to be taken in implementing an investment strategy. Avoid overly conservative investment strategies and consider diversifying investment portfolios across various asset classes, such as stocks, bonds, real estate, and alternative investments. Diversification helps mitigate risk and can potentially enhance long-term returns.
Seek professional advice
A financial adviser can help you balance risk and reward, provide personalised guidance and offer strategies to maximise your financial outcomes. They will help you to reach your goals more quickly and act as your personal coach to keep you motivated and confident in your financial plan.
Advocate for equal rights
On International Women’s Day we at Infinity stand with women everywhere and support them in advocating for fair and equal treatment in the workplace, including equal pay, promotion opportunities, and access to leadership positions. Addressing the systemic barriers to women’s advancement in the workforce will help narrow the gender investment gap by increasing women’s earning potential and ability to accumulate wealth over time.
Championing women who want to invest
If you’re serious about taking control of your finances, we’re serious about helping you do it. Infinity’s advisers are based in offices across Asia and have a wealth of experience in advising women expatriates to maximise the opportunities they benefit from while living in Asia.
Contact us today to discuss how you can secure your financial future and play your part in closing the gender investment gap!
A leading provider of expat financial services and wealth management services across Asia.
