Do you consider yourself to be an investor? Statistics show that you are more likely to answer yes if you are male.
The gender investment gap is hurting women’s ability to earn and to be independent in retirement. Women typically need more funds throughout their life than men - on average they live longer and are more likely to take career breaks to raise children. But the current state of investing shows that the average woman gets back a lot less from her investments than the average man. One estimate says that over a 35-year career span, the gender investment gap could cost a woman more than $1 million.
According to the 2019 Sharesies Investor Survey, in Aotearoa:
- Only 14% of women are investing in shares, compared to 25% of men.
- 28% of women feel knowledgeable about investing in shares, compared to 44% of men.
- Both sexes think investing is for people with a lot of money - 29% of women and 21% of men.
The gender investment gap doesn’t only impact individuals - it impacts NZ’s economy. About ⅔ of investors in NZ’s capital markets are men. If more women invest, it could add billions to the market, helping to both shrink the investment gap and benefit the health of the country.
It’s high time we take action to close the gender investment gap and make sure women are given equal opportunity to be investment-savvy.
What Causes the Gender Investment Gap?
To address the gender investment gap, we must first understand what is behind it.
Gender pay gap
As we discussed last week, women make less money than men. If their earnings are less, it follows on that they have less to invest.
In a study released in the UK just this month, researchers demonstrated how much of an impact the gender pay gap makes on investments. The analysis looked at how much would be earned by 2030 if a person started investing 10% of their pay in 2020 and received an average 4.9% return on investment every year. (The study reported in pounds which we converted to NZD to make this more relatable).
In the first year men would make $6400 while women would make $4176 - the difference is due to the gender pay gap. Extending this out to 10 years results in an earnings gap of almost $30,000. It’s easy to see how over a lifetime of earnings that number could potentially approach the million-dollar mark.
The gender pay gap directly affects KiwiSaver earnings. Your KiwiSaver contribution is set as a percentage of your wages. Lower salary means lower contributions that seriously impacts what your KiwiSaver can earn for you, resulting in less money available for your retirement.
Traditional gender roles
While times are changing, for a long time financial matters were seen to be the men’s domain. Women tend to focus on saving for immediate expenses like childcare, household matters and paying down debts while men are more likely to take risks with investing. And women are more likely to hang on to cash or put money into savings accounts rather than invest it, with 71% of women keeping their assets in cash.
Society fuels these stereotypical gender roles as well, where men are the earners and women are the spenders. Television and movies, marketing ploys, and educational materials all play into this mindset. In the UK, 73% of money articles targeting men were about investing while 90% of articles targeting women were on the topic of spending less. This funnels attitudes about money into outdated gender divisions.
Lack of knowledge and confidence
Going back to the Sharesies Investor Survey, only 28% of NZ women feel knowledgeable about investing in shares. Statistically, women are less confident about making investment decisions, causing some to avoid investing altogether. A lack of knowledge and confidence can make investing seem too intimidating to approach or even know where to start.
This all sounds pretty bleak so far, but there is a positive aspect to women and investing: women tend to be better investors, with a greater return on investment than men. Generally speaking, women tend to panic less and hold their investments steady rather than overtrading. Also they pay less in fees. All the more reason for women to be investing.
How to Tackle the Gap
Progress is being made on the gender wage gap and it will take more time for that gap to shrink until it no longer exists. But there is nothing stopping women from empowering themselves when it comes to investing right now.
- Get started with KiwiSaver. The easiest place to start investing is with KiwiSaver. It’s available to all Kiwis and BetterSaver has all the info you need to set up your KiwiSaver so you get the most out of it. We’ll make sure you choose the best fund that will enable you to smash your financial goals, whether it’s buying a first home or saving for retirement (or both!).
- Educate yourself. Financial knowledge will help you gain confidence in making investment decisions. Get to know your comfortable risk level and how to make it work for you. Organisations like Closing the Gap run workshops for women in NZ to learn practical investment skills whether you are at a beginner level or are more advanced.
- Find an advisor. A trusted financial advisor can guide you in the next steps of your financial journey. They offer an unbiased, long-term view of your finances with expert advice on where you should be putting your money.
BetterSaver is Committed to Equality
Our mission is to empower all Kiwis to make better financial decisions when it comes to KiwiSaver. Our platform gives equal access to KiwiSaver advice no matter what your situation is. We make it easy to ensure you are in the fund that will best help you meet your goals while aligning with your values and lifestyle.
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