Who do you think of when you hear the word ‘investor’? Perhaps a young guy living the Wolf of Wall Street lifestyle, or maybe you see an older white-collar professional, still male, who takes subscriptions out to Forbes and the Financial Times.
You would be forgiven for an unconscious bias towards such an image when only 26% of millennial women are investing, compared to 43% of men.
An investment gap exists, but is that because men are more confident in their abilities, or is there something else at play?
Men are more confident – but this hurts them
The disparity between the number of men and women investing has regularly been attributed to the so-called ‘confidence gap’.
A 2001 paper aptly named Boys will be Boys offered this as an explanation as to why men invested 45% more on average than women.
More recently, a YouGov poll found that 45% of men did say they “would feel comfortable investing” their money, compared to just 28% of women.
Men are also far more likely to go for bigger risks too, with only 3% of women saying they are comfortable with big risks to get a good return, compared to 26% of men.
It follows that women tend to take part in safer investment plans, with women accounting for 55.4% of cash ISA accounts, but 46% of stocks and shares ISAs in 2017-18.
So, men seem to be more confident, while women tend to think more long-term and take fewer risks.
Yet, according to a Warwick Business School study women in investment actually outperform men by 1.8%, suggesting that it might in fact be men that are missing a trick – risk management.
Women are missing the resources and knowledge to invest confidently
But why do men appear to be confident in investment? One explanation concerns the gender pay gap, the average hourly earnings of women compared to men.
The mean gap currently stands at 6.5% and the median at 15.9%, a result of various factors including a lack of women in senior positions; women being more likely to take time off for childcare; and traditionally ‘female’ roles, like nursing and teaching, paying less.
With less money to stretch across the cost of living, it’s plausible women tend to have less to invest with and more to lose, accounting for their lower participation in investment.
That’s not all though, as it’s inescapable that investing “feels like an alien world” that women aren’t invited to according to Holly Mackay, CEO of Boring Money.
Hence the stereotypical investor image being one of “an old, entitled, plummy-toned man, rather than a mum in jeans, our sisters, or friends”, she added.
Anna Lane, CEO of Wisdom Council, shares this line of reasoning suggesting it is not that most women have decided investment isn’t for them, but that they “simply haven’t considered” investment, mainly because investment products aren’t usually marketed to them.
What we can do to get you investing
People who are new to investment might be put off by a lot of the jargon-heavy content that is written nowadays, which tends to focus on regulation and compliance.
At Bulley Davey Wealth Management, we’re more interested in practical talk than corporate rhetoric to get your investment plans moving in the right direction – forward.
That’s why our down-to-earth team can explain our investment services succinctly and answer any questions you have clearly.
We can understand and relate to prospective investors, including people who think investment is an ‘alien world’.
We start our services from your ideas and concerns and end them with your results and growing confidence.
Get in touch with us today to talk about starting your own investment portfolio.