The gender investing gap

The gender investing gap

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Holly Merriman
Published: 03 Aug 2017 Updated: 13 Jun 2022

We’ve all heard of the gender pay gap – it’s one of the most highlighted examples of inequality between men and women in the UK, but according to a recent survey by The Telegraph*, women are also lagging when it comes to investing for their future. The survey found that while similar numbers of men and women have savings accounts (50% and 51% respectively), just 10% of women have a stocks and shares ISA, compared to 17% of men. A similar study by TD Direct** found that around 80% of women do not have an investment portfolio, compared to 66% of men.

What are the benefits of investing and what are women missing out on?

People invest to make the most of their hard-earned savings and generate more money from them. Some people invest in shares because, if chosen carefully, they can grow more than cash in savings accounts over the long term, especially when cash interest rates are low. If women are choosing not to invest for various reasons, they are missing out on potential higher returns, increasing the gender investment and wealth gap.

Why is this gender gap a problem?

The gender investing gap is most evident when looking at pension savings. A recent study by Aegon revealed that men have almost three times the pension savings of women, with the average male pension pot totalling £73,600 compared with the female average of £24,900 and the gap is continuing to widen. The research also showed that 35% of women do not know what they have saved for retirement and 42% of women have never reviewed or taken any action that could impact their plans for retirement. It is crucial that more women pay attention to their pension savings.

Where to start

Regardless of gender, everyone has a different goal they want to achieve by investing. One of the most common reasons is to build up enough money for retirement. Others invest to cover the cost of university fees or to finance the holiday of their dreams. There is no one-size-fits-all approach to investing for either men or women. Your goals will influence the type of investments you buy, the level of risk you can take and whether you should focus on income, growth or both.

Essentially, you need to take a close look at your finances, prioritise and make a plan:

  1. Consider any outstanding debts – pay off any existing credit card debts if possible and repay or refinance any other debts with a high rate of interest with one that charges a lower rate.
  2. Keep an emergency fund. The cash equivalent of six months of your take-home pay is a good guideline here.
  3. Establish what you can afford to save and try to put away a percentage of your after-tax salary every month. Even if it is small, investing something is better than nothing.
  4. Look at your pensions and maximise them where you can. Review both old and current pensions and find out what they are invested in, how much they are worth and what you are paying in fees. If you are not happy with how your pensions are performing or the service you are receiving, you can move to a different pension provider – although it is important to check you won’t lose any benefits by doing this.
  5. Invest in an ISA. ISAs make an excellent home for your savings and investments – they are easy to use and come with generous tax benefits. The interest you make on cash savings or the gains from investments are free from Income Tax and Capital Gains Tax. Because of their generous tax benefits, the Government sets limits on the amount people can pay their ISAs. Each tax year you get a new allowance, which is currently £20,000.

Once you’ve maxed out these tax-efficient ways of investing, you should consider investing using a general investment account and using your dividend and Capital Gains Tax allowances.

The key points about investing

Investing doesn’t need to be complicated or expensive. We suggest sticking to a few simple rules in order to achieve the end result you want from your money:

1. Diversify – don’t keep all your eggs in one basket

All investing involves risk. The key is reducing this level of risk to one you are comfortable with. One of the most effective ways to do this is to diversify. Over a given time period, some investments will go up and others will go down. Since we can’t predict where the market is headed or which investments will perform the best, we diversify. At Tilney, in our managed portfolios, we diversify across a number of different asset classes to reduce risk. These include UK and international shares, corporate and government bonds, and alternative assets such as property, commodities and absolute return funds.

As financial markets move over time, a portfolio may shift away from its original allocations, so we suggest reviewing it once or twice a year to check if it needs to be rebalanced. At Tilney, in our managed portfolios we rebalance your investments automatically as needed.

2. Keep costs low

We know we can’t control the markets, but one thing we can control is costs. Tilney manages more than £23 billion for clients, which means we can drive costs down with fund providers to make sure our clients are always getting the best deal. We are also open and transparent about the fees we charge for investing so you know exactly what you are getting for the cost involved.

3. Don’t try to ‘time’ the market

Although market timing is often seen as the holy grail of investing, almost no one knows how to do it. It involves knowing when the market will be ‘low’ or ‘high’, so unless you have a crystal ball lying around, it’s almost impossible to predict. Regular investing over time in every type of market environment is the best way to ‘play’ the long game.

4. Invest regularly

Set up a regular amount to invest and make it a habit – whether it’s made every week, month, or quarter. Set up a regular contribution if you can, so you can invest it then forget about it.

5. Keep it simple

You don’t have to be interested in the intricacies of the Chinese stock market, commodity prices or discounted cashflow to be an investor. You can buy an investment portfolio online such as the Ready-Made Portfolios available through Bestinvest, and you don’t necessarily need significant funds to do this. In fact, our Online Investment Service will let you get going with as little as an £80-a-month direct debit.

6. And finally, speak to an expert at Tilney

With just over half of British women describing themselves as uncomfortable with investments, we encourage women (and men!) to seek expert help. If we can encourage more women to consider investing as a long-term alternative to cash savings, this could have a significant impact on reducing the investment gap, while providing a boost to the wealth generation of women, their families and the country at large.

We’re here to help

We have a range of services available through our wider Tilney Group – so whether you want to manage your own investments, invest with support from an adviser or have an expert look after your investments, we can help. We also have a nationwide financial planning service to help you reach your goals – whatever you want to achieve with your money.

To find out how we could help you, call us on 020 7189 2400 or email Alternatively, please take a look at our range of investment and financial planning guides for more information on the many ways we can help you achieve your goals.

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*'Women make better investors - so why do they shun the stock market?' - The Telegraph

**'How can we get more women investing?' - Money Observer


This article was previously published on Tilney prior to the launch of Evelyn Partners.