Investment guide

Overcoming the gender investment gap

The value of investments can fall as well as rise, and you may not get back the full amount you invest. Eligibility criteria, fees and charges apply. 

The gender investment gap

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: findings from research firm Kantar (2018) suggest that the value of investments held by women aged between 21 and 53 is just half that of men in the same age group.

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.

Losing out

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 many savings interest rates are at rock bottom and outpaced by 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; Kantar 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

NatWest Invest has a straightforward range of investment funds, which are all ready-made with differing levels of risk. The lowest-risk 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 big returns than with the highest-risk fund, the chances of losing money may also 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.

On the other hand, investors who choose to invest in the shares of just one or two companies run the risk of all their shares falling at the same time. This could lead to far greater losses than with a more diverse portfolio. Nor do you need to have a big lump sum: an account can be set up with NatWest 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.

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