The demographic profile of the investment world is undergoing a seismic change. Women are now adopting a more proactive role in building and growing family and personal wealth. So, what’s driving this shift? There are various socio-economic drivers behind this change, but the overriding one is an increase in the economic power of women themselves. And as their wealth increases, women are steadily taking on more responsibility for family financial decisions that will shape their future.

Investing In A “2020 World”

When it comes to women and investing, progress has certainly been made – Investment is no longer a “man’s-world” thank goodness, but there is still some way to go. In the USA, a recent survey by WealthSimple found that women invest 40% less than men, highlighting an ongoing gender-based gap in the investment world. So a good question to ask would be why is this still the case?

A survey by US firm Visual Capitalist also produced some interesting findings. 40% of women felt that financial professionals treat female investors differently, while 36% said they felt patronised by them. And 24% felt that investing is a “man’s world’.

Women Have Different Motivations For Investing

Based on the results of the survey, Visual Capitalist drew one crucial conclusion: when it comes to investing,
women are not one homogenous group. Instead, they found that women can be split broadly into four groups:

  1. Suddenly single: Women who have been recently separated, divorced or widowed in the past five years
  2. Married partner/breadwinner: Professional women who represent the primary source of income for the household
  3. Married contributor: Professional and non-professional women whose primary contributions to the household tend to be non-financial
  4. Single breadwinner: Professional and non-professional women defined as living alone or as a single-family unit.

And these groups all have different needs and different motivations for investing in the first place. For example, women in group 1 may find themselves sitting on a large lump sum, like a divorce settlement, which they are considering investing to secure their financial future. Those in group 2, are shouldering the main responsibility for sustaining the level of income that her family needs. Women in group 3 may be keen to become more financially independent, while the onus on those in group 4 is to ensure they can provide
for all their family’s financial needs – on their own.

Tips For First-time Women Investors

So what if you’re a woman investing for the first time? There are a few investment tips that can help you to reach your financial objectives.

  1. Educate yourself: When it comes to investing, knowledge is power. While it might seem like keeping your cash in a deposit account is a safe option, the impact of inflation means that you could actually be losing money in real terms. And with interest rates at rock-bottom levels, even putting your money in a savings account could prove less than ideal for growing your capital.
  2. Think about your goals – for the short and long term: What kind of lifestyle do you want to achieve – or maintain – in the next five years? What about the next ten? And don’t forget that for many people, retirement is just the start of the story when it comes to investment goals. With life expectancy increasing, it makes sense to plan for around 20 years in retirement.
  3. Choose an investment approach that works for you: How much risk are you comfortable with? If you’re happy with taking on some investment risk, you might choose to manage your money yourself and make your own investment decisions. If you’re more cautious, handing over the reins to an investment manager could make sense, although you’ll face higher fees. Another “halfway house” option is to invest through a robo-advisor, an automated service with lower management fees.
  4. Identify your values: If you want your investment to create positive social and economic change, it’s worth considering impact investing. Some firms even offer an investment strategy that’s specifically designed to benefit women’s causes over the long term.

Whichever group you fit into, and whatever your financial goals are for the long term, investing can
be one of the most powerful ways to secure your financial future.

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