Why do so few women invest?

4 min read 23 Jun 22

Summary: Statistics show that more men invest than women. Perceptions and societal factors might be the cause, but with research showing that women make good investors, is it time to change our views?

More men invest than women. This may not be a revelation, but that should not make it any less concerning. 

According to the most recent official figures in the UK, only 43% of stocks and shares Individual Savings Accounts (ISAs) in 2018-19 were opened by women. Yet more than half of all cash ISAs – 56% – were made up by women.

This contrast shows that, despite the persistent gender pay gap, it is not simply an issue of men having more money to set aside. It points instead towards a greater willingness among men to translate their savings into investments.

Competing theories

So, why do fewer women – young and old – take the leap and invest their savings for the future, compared with men?

There are competing theories, as you would expect, but perceptions are often cited as a factor. Historically, the global investment industry has been predominantly run by men, arguably for men. Times may have changed, but reputations are hard to shake off. Providers are also open to criticism that they have historically targeted men, however inadvertently or implicitly.

There are structural factors in society to consider too. Despite more balanced rights and responsibilities among spouses, gender norms and inequalities prevail in various guises. Among these is the greater tendency for women to put careers on hold, either partially or entirely, to look after children. While this often reflects disparate maternity and paternity rights as much as anything, it will have an inevitable bearing on women’s salary growth and pension pots. 

It has been argued that this often culminates in a lower sense of financial independence that is then reflected in a tendency to keep cash savings close to hand and a reluctance to take on investment risk.

We need to think differently 

Irrespective of why more women prefer not to invest their savings, it matters – being too cautious with your long-term savings means you run a greater risk of not having enough money to meet your needs or realise ambitions.

In one sense, of course, cash is unquestionably the safest place to store your savings. Unlike stocks and shares or fixed interest (debt) investments, which are all less secure, up to £85,000 of your money is secure in a bank or building society through the Financial Services Compensation Scheme.

However, over the long term, relying entirely on cash carries dangers. This might seem counterintuitive, but think about the inflationary pressures we are currently experiencing. Unless the rate of interest that you receive exceeds the rate of inflation, the real value of your cash savings, in terms of what they can be used to buy, will fall over time.

Reasons why women make good investors

Research by the Warwick Business School showed that the returns for female investors were almost 2% a year higher on average than those of men. Supporting this research is another study undertaken by Fidelity, who surveyed approximately 3,000 adults equally split between men and women; it found that on average, women’s returns were 0.40% higher than those of men.

These studies concluded that female investors exhibited behaviour better-suited to long-term investing. They tended to take a more balanced and less impulsive approach than men in the study – avoiding speculative investments and trading less often. 

The point here is not that men or women should pile all their money into investments. Instead, the lesson should be that investing is accessible to all of us, and can play a valuable role in helping us achieve our long-term goals. 

By putting some of your long-term savings to work through investments, means you can aspire to achieve much greater returns than from more traditional savings accounts. While this will always involve accepting the chance of losing money, we should never confuse the fluctuations in value that are part and parcel of investing, with the risk of permanent losses. 

If your investment horizon is years in the future, you should be able to ignore the day-to-day gyrations in market prices which, over time, are rendered less relevant.

Please bear in mind that we are unable to give financial advice. The views expressed here should not be taken as a recommendation, advice or forecast.

The value of any fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.

By M&G Investments

The views expressed here should not be taken as a recommendation, advice or forecast.

The value and income from any fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that any fund will achieve its objective and you may get back less than you originally invested. 

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