Women are arguably more socially and financially independent than ever. Despite the progress that has been made in the past century, however, gender inequality continues to be a persistent socioeconomic hurdle for women the world over. And, while the gender wage gap has been heavily, and justifiably, publicised, recent studies have shown a similar gendered gap in investment capital and financial literacy, confidence and investment capital that may be altogether more harmful.

According to a 2023 article by The Guardian, women in the UK typically have a significantly smaller pension pot than men by the time they reach 55. The 35% gap in accrued pension has been attributed to several systemic issues impacting them, but the solution could lie in encouraging more female investors. To that end, understanding why women are less confident about investing is essential.  

Breaking Down the Financial Gap for Female Investors

We may all be familiar with glass ceilings and sexist hiring policies but, when it comes to the breadth of socioeconomic factors creating a financial gap for women, those are arguably the tip of the iceberg. Some of the  leading factors driving the gender pay gap include:

1. Stuck in Part-Time and Unpaid Work

Factoring in childcare and housework, young UK women produce approximately £140 billion in unpaid labour. On average, women carry out a minimum of two and a half times more unpaid household and care work than men globally. This not only means that a large portion of the socioeconomic value they produce as a gender is overlooked, but also that they are at a significant disadvantage when finding the time to secure (and juggle) full-time, paid labour.

Even today, many women doubt their ability to be financially independent, with over a third still financially dependent on their partners. This is in no small part due to a relative lack of job security.

2. Forced to Balance Career with Family

Analysis by the Trades Union Congress (TUC) shows that women are seven times more likely to take career breaks than men due to ongoing commitments to their families and childcare, as well as a lack of flexible working options. 77% of UK women state they were more likely to apply for work advertising flexible options and hours.

 3. More Likely to Be in Low-Paying Roles

A study of the UK labour market by Lancaster University shows that working women are almost twice as likely to be in severely insecure work as men, with systemic barriers to stable, full-time work especially impacting working mothers with young children. Overall, half a million more UK women than men earn below the real living wage.

Moreover, the House of Commons reports that 38% of UK women work part-time compared to 14% of men, with the Office for National Statistics (ONS) citing this disparity as the leading factor in why they earn less than their male counterparts.

4. Fewer Financial Assets

In no doubt due to the abovementioned systemic disadvantages, around 67% of women in the UK do not invest their money compared to 56% of men. This equates to a population three times the size of Birmingham according to HSBC. The same report reveals that 34% of them do not have any savings.

In comparison, an article by the Financial Times shows that men have £1.01 trillion invested in the UK whereas women only have £450 billion. Male investors also held around £102,000 on average in investments, while female investors held £66,000.

While these figures can be partially explained by women generally having less capital to work with, the fact remains that driving female investment could help level the financial playing field between genders. If women invested at the same rate as men, an additional $3.22 trillion in global assets would be generated. So what else is holding them back?

Why Women Lack Confidence When Investing

Regardless (or, perhaps, because) of the systemic barriers keeping women from financial independence, there is evidence of a prevailing, global sentiment of unease and uncertainty around investing among women. This uncertainty is largely rooted in a lack of financial education.

Women and Financial Education

According to a report on the financial confidence gap by HSBC, as many as 69% of women in the UK do not feel confident about investing money, with 27% claiming their lack of confidence comes from a lack of knowledge. While 45% of women felt they did not have enough money to invest, this is largely based on the misconception that investing requires large sums of money. This is evidenced by only 36% of men believing you need to be a high-earner to invest compared to 55% of women.

Feelings of financial illiteracy among women are not limited to investing. Research by Legal and General shows that UK women are 33% more likely than men to claim they do not understand how their pension works. Another report by the Organisation for Economic Co-operation and Development (OECD) revealed that only 49% of women surveyed knew how compound interest worked compared to 75% of men and that women generally had a lower level of financial knowledge in several developing and developed nations.

When women do invest, 20% of them do so based on the investments made by friends and family compared to just 8% of men who do the same. Other studies have found that, even among female investors, 65% thought of themselves as “novice” investors. On the opposite end of the scale, only 15% of female investors considered themselves “informed” compared to 28% of male investors.

Whether the gender investment gap is a factor of low financial literacy or a higher level of risk aversion among female investors is unclear, but 50% of women in a Fidelity.com survey claimed they had become more interested in investing since the COVID pandemic, with 62% committing to increasing their financial education. This suggests that increasing financial literacy among women is a major factor in securing female investment.

What Else is Stopping Female Investors?

A Financial Times article on the gendered results of a multiple-choice financial test suggests that the uncertainty on financial matters in women may be due to nervousness.

The perceptions of financial managers and investors towards women also minimise their potential as investors. A study into female investment patterns by the Boston Consulting Group (BCG) showed that investments in companies founded by women earned less than half in funding compared to those founded by men despite generating 10% more in cumulative revenue over five years. Similarly, 86% of asset managers in a U.S. survey specifically targeted male customers over female ones despite 86% of women responding to a Fidelity.com survey agreeing that access to an investment manager would make investing less stressful.

Another potential explanation is that women do invest, but with less frequency in trading than men. According to BCG, women traded stocks an average of nine times a year while men did so 13 times. Women also tended to do more research before investing while men took a riskier, speculative approach.

Are Women Becoming More Confident Investors?

Despite current projections on the scope for female investors to increase their influence in the global economy, there is a growing interest in financial independence and wealth management among women.

In developing countries especially, confident female investors are establishing an economic foothold. For instance, a relatively recent economic boom in Asia has accelerated the growth of women as consumers and market stakeholders. According to Capital.com, 59% of Indian women generate their own wealth with only 20% deriving it from their spouse. In China, 68% of women generated their wealth, with just 16% relying on their spouses. Additionally, the number of women in India (47%) and Brazil (46%) who showed confidence in investing dwarfed those in countries like the UK (29%) and the U.S. (23%).

Research by investment platform Wealthify suggests that women from Gen Z have considered investing more than most of the general public in the past year, and that, unlike previous generations, Gen Z women are more likely to avoid investing due to a belief that it is too time-consuming than financial illiteracy. They were also more discouraged by investments that did not align with their social and ethical values.

A study of US investors has even shown that the gender confidence gap is closing, with the difference between confident female investors and confident male ones shrinking by 13% since the pandemic. Indeed, the number of women investors has started to climb, with many wealth managers shifting to accommodate their needs. As the World Economic Forum points out, a push towards increased financial education could even close the gender wealth gap much faster than previous projections

The Future is Female at Concept Capital Group

Given their preference for long-term security and greater composure than male investors, women seeking modern and alternative investment opportunities may find a perfect fit with Concept Capital Group. Our 360-degree management service caters to their interests in fully managed investments, while our socially impactful mission of affordable housebuilding for vulnerable people gives them the model opportunity to invest ethically.

To find out more about how we support investors, new and old, book a call with our team today.

Concept Capital Group

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