Home Wealth Personal Finance Why women invest less than men (and it’s costing them big time)

Why women invest less than men (and it’s costing them big time)

New research sheds light on female finance.

Senior Digital Journalist, Your Money

Editor’s note: This article contains information only. It is not intended as general or personal advice. Your Money recommends seeking professional advice specific to your personal circumstances. 


Australian women are nervous about investing and it’s costing many of them tens of thousands of dollars or more by the time they retire, according to a new study.

The paper conducted by investment manager Fidelity International found that women are falling behind men when it comes to building their wealth partly because of a wariness and lack confidence about investing.

“They’re used to traditional ways of putting money into cash savings accounts in the bank… as opposed to going for more risky assets such as property or shares,” News Corp Australia personal finance writer Sophie Elsworth told Your Money Live.

The report showed that many women feel they lack the knowledge to properly invest in stocks and don’t feel they have enough time to properly educate themselves.

“As a result, they’re incredibly conservative. A lot of them also admit they don’t have enough money outside of their superannuation, so that’s also a worry as well.”

The report found that only 48 per cent of women hold any savings or investments outside of their superannuation accounts compared to 55 per cent of men.

And with interest rates at record lows, there’s little reason to keep cash in a bank account over a long period of time and lot to lose, according to Elsworth.

“Some [bank accounts] are getting returns of less than one per cent, and you have to meet really strict criteria to make sure that you get up to even one to two percent.”

The dollar figure

The opportunity cost of keeping funds in a low-rate savings account means that more women are missing out on the opportunity to grow their wealth.

That’s becomes a particularly key issue when it gets to the retirement stage.

While the pay gap is heading in the right direction, recent figures showed Australian women are retiring with a staggering 37 per cent less than men in their super accounts.

That issue compounds when added to the reality that fewer women are choosing to invest.

The Fidelity report found that if a person had invested $5,000 a year into a cash bank account with a rate of about three per cent over the last 18 years, they would end up with $120,000 today.

On the other hand, if a person had put the same amount annually into an ASX200 ETF, today they would have about $194,000 – a difference of more than $70,000.

Tips to get started

Elsworth says the first step is to look at your financial literacy.

That might mean doing some research about investing, talking with family and friends or seeking expert advice.

From there, the best way to learn is by getting started.

“Look at opening an online share trading account, that’s really easy to do. And invest small amounts, whether it be $100 or $500. Start really small and just watch the money grow. Or see how it fluctuates,” she advises.

“Because you don’t want to be left at the other end of retirement and be left scratching for money.”

Watch the discussion in the video above.

Read more: Australian women are still retiring with too little in super
More: Women’s economic progress at slowest pace in 5 years
More: Are women facing a financial crisis?

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