Encouraging Women to Invest in Their Future

January 17, 2018

Encouraging female investors.pngEncouraging Women to Invest in Their Future

Female Investors: The Largely Untapped Market

According to Time magazine citing a study by financial planning software company Learnvest, men are five times more likely to invest than women. While the number of female investors is on the rise, due in part to the availability of online investment, the opportunity for women to invest is greater than it ever has been.

Why are women not investing?

It’s 2017. Women have been flourishing in the workforce for a long time now, so why are there not more women taking control of their collective financial future? Why aren’t more women investing money? There is a misconception that women lack the technical know-how and confidence to invest. There is also the perception that investing is only for the wealthy. Again, this falsehood should be dismissed and we should be taking charge. Anyone who draws a regular pay cheque, male or female, should be putting their money to work through investments.

Lack of access to assistance

The prospect of investing, for those new to it, can seem daunting. You’ll no doubt have heard horror stories about people making an investment, only to have it fall through and them end up destitute and on the street. While all investment carries risk, this scenario is far from reality. The fact is, even if you don’t travel in financial circles (and hint, you shouldn’t be getting your financial advice from friends), finding a reputable licenced financial advisor is not that difficult. While advice can be costly, if you’re new to investing seeking out a professional is your best option, as they are the only people legally qualified to advise you on your personal portfolio decisions.

The advent of social media has also given rise to numerous online investment clubs. While I cannot advocate taking advice from an informal (or formal) club, they may be a good source for insights and investment opportunities.

Pay Disparity

According to the Australian Government’s Workplace Gender Equality Agency, at the time of writing, the national gender pay gap was 15.3%. I’ve heard it commonly said that you should aim to invest a minimum of 10% of your salary, and if this is the case, it’s clear women will generally have less to invest than men. While this is a problem that we should be aiming to solve, it should not be considered a valid reason not to invest at all. In fact, the importance of investing early and benefiting from compounding returns is even more critical. Being paid less than someone else for the same job, while not fair, should not preclude you from making the money you do earn work as hard as possible for you.

Fintech is making great strides in opening opportunities for everyone to invest, regardless of income levels. Apps like Acorns use micro transactions to invest in shares for you, and are a great option if you wish to make a start. BrickX offer the opportunity to break into the real estate investment market at low cost. Other fintechs, Timelio amongst them, are offering similar online investment opportunities with lower risk but high reward.

Saving for a rainy day

According to research from the Commonwealth Bank, women, more than men, prioritise everyday finances over investments, considering financial security to be paying bills and coping with unexpected expenses rather than building a stronger financial future and comfortable lifestyle. While they may then become confident investors later in life, this puts them at a financial disadvantage, having missed out on years of potential returns.

The Difference Between Male and Female investors

As a generalisation, men tend to be more confident and aggressive when it comes to career, negotiation and investment than women. This is, in part, a factor in the pay disparity between men and women, and why more men tend to invest in volatile markets like the stock exchange. When asked whose investments they thought performed better over the previous year, 94% of female respondents believed the men would come out on top, when in actuality women had outperformed men by on average 40 basis points.

Because of this lack of confidence, women tend to be more risk-averse when it comes to investing, which can lead to lower levels of investment from women.

Why women are better Investors

A lot of the reasons stopping women from investing are also the same reasons that make women great investors. Women tend to be better savers than men, owing to both their lower income and differing view of financial security. We also tend to be more cautious with our investments, not investing for bravado and bragging rights, but because were sure it’s the right move. When we do participate, we typically invest in less risky investment vehicles. Our investment decisions are made based on a long-term goal focus, and this commitment to due diligence and forethought has led us to excel at investing.

Getting Started

There are no legitimate reasons women should invest less frequently than men.

If you’re new to it, there is plenty of support available, from licenced financial advisors to women’s investment clubs. There is something to suit everyone, from low priced penny stocks, short term invoice trading, to long term real estate investing, and substantial business investment/angel investors. No matter your circumstance, there is something you can afford to be doing.

2018 is the Year of the Woman. It’s high time we each began taking control of our financial future, but it’s a decision we can only make for ourselves. Just as we look after our health and well being with an eye on the future, our financial health will be just as important as time goes on.

 

Charlotte Petris is the Founder and CEO of Timelio. She is a qualified Chartered Accountant and presents regularly on investing and invoice finance opportunities.

If you’d like to find out more about investing in invoice finance, contact us or call 1300 386 363.

 

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