Research by the Disposable Income Index indicated many women they lack the confidence to invest and save their money. Managing director of Parsonage Financial Planning, Flora Maudsley-Barton, discusses why the investment gender gap exists

 

It’s official – one in 10 Britons now says they are ‘bad with money’, but what does this mean for the population when it comes to cash? In a poll of 2,000 UK adults, and despite our living in the age of austerity, many admitted they were ‘blindly’ spending without considering potential consequences.

What’s more, around one in three of those asked said they had never considered cutting back on outgoings and putting more money in to savings. These statistics alone are worrying for the UK economy and could impact the next generation financially, but further studies find that those suffering the consequences the most seem to be women.

Confidence gap

While undertaking its studies, the Disposable Income Index revealed a huge contrast in the level of confidence felt by both men and women when it comes down to their money matters, and confirmed a big difference in both sexes approach to investment and saving.

While half of men say they feel very confident when it comes to managing finances, less than one third of women would say the same. The women surveyed felt that this was because they were afraid of losing money, followed by a lack of understanding.

Held back

It seems clear that women may feel held back when it comes to making the bigger financial decisions, and it’s important to empower females when it comes to money matters to decrease the savings gap between the sexes.

For those making the first foray into investment or efficient savings planning, it can certainly be daunting and the prospect of making a possible loss when dabbling with things like stocks or shares is a very real concern.

I’d recommend that anybody looking to invest gets clued up on the fine print in order to make smart and savvy decisions that incur minimal risk – a little bit of research can go a long way.

Same risk

Although statistics show there are more than a million stocks and shares ISAs held by men, compared with 870,000 held by women, savings and investments hold the same risk whether you are male or female so ultimately, being a woman doesn’t put you in a compromising situation – contrary to what you may think.

The world of investing is typically associated with men because more men are opting to invest however, gender bodes no difference to the outcomes of financial decisions.

Despite a higher percentage of men having investments in the UK, the average amount invested by different genders is incredibly comparable with men investing an average of £34,647, while for women the figure is £33,502.

 

Be savvy

As with any investment, there are risks involved but there are also actions that can be taken to minimise this greatly. I would always advise clients to think carefully about how much they want to invest to ensure that they can still maintain their current lifestyle should this money be lost for any reason – in other words, don’t invest what you can’t afford to lose.

Starting with smaller amounts is a good stepping stone and as you begin to see the return on investment you can gradually look at upping your savings on an annual or even monthly basis.

Investing gradually with an affordable and fixed amount each month can also work well. It’s done automatically so people tend to stick to it, then they buy more shares when the market is low, and fewer when the market is high. That sounds technical and difficult to manage, but it isn’t – it’s just the way it works.

Seek advice

What many first-time investors don’t know is that there are a multitude of options when it comes to saving whether this is through savings accounts, ISAs or even in stocks, shares or property.

The best way to assess your saving strategy is to look at your current financial situation and work out realistically how much you can save whilst still maintaining the lifestyle you need and desire.

For those who want assistance to objectively look at their income and outgoings and better balance the books, utilising the help of a financial adviser can often be financially beneficial.

Ultimately, women could see themselves better off if they commit to investing and saving a percentage of their earnings and although the prospect can be intimidating, expert advice is available and could see you prosper long-term.

*The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.