Surprisingly (or unsurprisingly, depending on your view), very few women invest.
Only 21% of women invest, compared to 41% of men who place their savings into investment portfolios.
What is more puzzling is that women hold 32% of the world’s wealth.
Why then are women such reluctant investors compared to their male counterparts?
The truth is that women are missing out on investment returns they could earn from their money. By not investing, they are losing out on alternative income streams and financial freedom.
P2P investing has often been lauded as simple and straightforward for all investor types. Yet, still, this is an area that is lagging in attracting female investors.
Why do so few women invest?
Different end goals
When building wealth, most women aspire to develop financial security for their family and set aside wealth for their retirement.
For men, this is different, who tend to prioritise accumulating more personal wealth.
Even within the workplace, men are more ambitious in promoting themselves for jobs than their female counterparts.
The same attitude appears to prevail when concerning investing. Men seek to push themselves to obtain more financial wealth, whilst women have a lower investing rate.
Aversion to risk
In the UK, only 7% of women invest in accounts not related to the stock market.
When women invest, they tend to take a more conservative attitude towards investments than their male counterparts, possibly due to lower confidence in accepting risk.
Research from the University Van Tilberg in the Netherlands backs up this attitude, stating that females are not keen on taking significant risks.
However, you could argue that this does not necessarily mean that women are risk-averse or lack confidence.
Instead, you could say that women tend to categorise how they view their finances.
For instance, women will often ring-fence areas of their money as not to be spent. For example, the savings they are hoarding for their children’s school or university tuition – whilst some men (not all) take a more aggressive risk approach.
However, it does appear a more conservative attitude seems to pay off since women tend to statistically outperform men in investment returns.
Perhaps a key barrier for women wishing to invest is the nature of investment institutions themselves.
Financial services, like several other industries, sadly still tends to be male-orientated and not catering to female audiences.
Less female financial advisors can discourage women from feeling confident and trust in investment products.
The gender pay gap
Sadly, despite women making up 47% of the labour force by 2024, they still only earn $0.80 for every $1 a man makes.
Meaning, women are likely to have less disposable income than men because they earn significantly less.
With lower income, women cannot put more of their earnings aside. A significant proportion of their income will be required for household expenses from paying rent or mortgage shopping and bills.
With less remaining, women are unable to invest as much, lowering their savings potential growth returns.
Why women need to invest more
Women live longer
It’s no secret that, on average, women live 4-5 years longer than men.
Women have to build up more wealth to sustain themselves over this four-year gap. However, with their salaries, on average 20% lower than men, it makes this even harder to have enough in retirement to live longer.
Furthermore, putting away more during their working lifetime means women live on less during their employment years.
This is why it is imperative that women ensure what savings they do have, grow exponentially.
Stock market and P2P investing provide long-term growth, with the latter providing better returns by investing compound interest, too, helping to cover the 4-5 year gap required in retirement.
State retirement benefits are inadequate
European countries’ basic state pensions offer inadequate state retirement incomes.
Whilst in retirement, most people will have lower expenses. To live only off state benefits will be challenging to live a comfortable life.
Investing can build up a solid base income in retirement for women to complement their state and private pensions. It could also provide an opportunity for women to retire earlier than the state retirement age.
Low returns on savings accounts
Inflation typically sits at a minimum of 2% per year.
Yet, savings rates across many European countries do not offer returns even to match that.
How are women (or even men) able to keep pace with the cost of living from any savings they make, let alone afford to save for retirement?
From stocks and shares to P2P, investing offers women (and men) an opportunity to earn higher returns on their savings than letting their cash sit deposited in a bank deposit account.
Earning above the inflation rate will make a difference when you need to cash it out.
How can businesses support women with their investing?
Make it easy to manage
Financial investments, for whatever reason, always seem to use language and products that are complex to understand and time-consuming to implement.
Both women and men are juggling careers, family and relationships, let alone attempting to understand investment strategies.
It’s why we pay brokers to invest in funds on our behalf. In return, they (hopefully) obtain significant growth gains on our investments.
P2P investing was one such investment vehicle that removed the need for using investment managers. Thus, the savings made on not paying fees paid to an investment manager are given to P2P investors.
However, this still needed women investors to select which P2P loans to invest in, which is why many P2P platforms, including ours, offer Auto Invest.
In just a few clicks, female investors can
- create a Monestro account
- deposit their funds
- set up Auto Invest filters
- let the platform select loans and invest in them on their behalf.
Auto Invest is perfect for women who wish to set up their P2P investments. Rest assured that the heavy work is being done, providing returns as per their investment goals.
Reduce the minimum investment size
As mentioned above, women have less disposable income than men, meaning many cannot afford to invest as much every month.
Companies like Monestro have reduced the minimum investment size to only €10 a month, meaning more women and those with lower incomes are not frozen out from growing their capital further.
Monestro supports anyone searching to grow their funds, from more minor, first-time investors to more savvy ones.
Debunk the myth that investing is only for men
Women make up, on average, just under half of those employed in the finance industry.
The gap is closing; Deloitte produced research stating that it should increase in the next decade, with female leaders growing to 30% of the industry.
Although the gap still has far to go, the myth that finance is the realm of a patriarchal-dominated sector is finally eroding.
With more women taking up leadership positions in financial institutions, removing this harmful myth will convince more women that investing is for them and not only men.
Investing is for all
Investing shouldn’t be about becoming super-wealthy.
Instead, it’s about prioritising women’s future and making sure there’s enough at the end of their lives.
With P2P investing, women can invest hands-off, earn higher than average returns and help even the financial gender gap.
Women are just as capable of handling both their own and their family’s financial accounts and have demonstrated that they can outperform their male counterparts.
Nevertheless, getting women to take the leap of faith and invest can be challenging if they have never done it before.