Is 2021 the year more women should start investing?
With Bitcoin’s bull run and a Reddit post causing a stir on the stock market in January, you may have seen more about investing than ever before. Furthermore, it may look more appealing to you. So, it begs the question, is 2021 the year more women should start investing?
Over the years, research has found that women are more likely to save than invest their money, despite potentially higher returns. A recent article from unbiased reported that “just 10% of women have a stocks and shares ISA, compared to 17% of men.”
Other recent statistics also reveal that 14% of men hold other investments outside of their ISA, while just 7% of women do.
As the gender pay gap has also led to a significant pension pay gap of around 11%, some would argue that investing has become a necessity for women as opposed to a lifestyle choice. As the odds are stacked against women when it comes to financial freedom, we think it’s about time that changed.
A road to financial freedom
Until the introduction of the Sex Discrimination Act in 1975, it was still legal for banks to refuse women mortgages if they didn’t have a male guarantor. Shocking, isn’t it?
Furthermore, it wasn’t until 200-years after its launch that women were finally admitted to the London Stock Exchange in 1973, with the first woman appointed in a senior position in 2001. So, it’s hardly shocking that today, there’s a gender gap when it comes to investing.
In a world where the women before us have fought hard for financial freedom, we think women should feel empowered enough to enjoy it.
While the idea of investing can be daunting, it doesn’t need to be as complicated as you first think, nor as risky. In fact, research has found that over any 10-year period since markets began, nine times out of ten, shares have performed better than cash. When that timeframe is expanded to 18 years, your money is 99% more likely to work harder for you than when investing in shares.
What’s more, over the years, several studies have found that women outperform their male counterparts when it comes to managing investments. Isn’t it about time we took the plunge?
Of course, investing isn’t just something you do on a whim. Take the time to do plenty of research and familiarise yourself with the options available to you so you can ensure you get the most out of your hard-earned cash. A solid understanding of your options and why they suit you is vital to success. There are varying levels of involvement and risk from opting for a very hands-off approach to selecting each of your stocks and shares; you have the freedom to choose.
Before you consider making your first investment, Emilie Bellet, the author of ‘You’re Not Broke, You’re Pre-Rich’ and founder of Vestpod, suggests you should: “Conduct a financial health check. Look at your spending, debts, short-term and long-term savings, and credit score. Once you’ve cleared your debts and saved up for an emergency fund, you can start to invest.”
Emilie added: “Define your goals and think long-term. You should be investing in the stock market to achieve specific goals. These can range from providing for your children to buying a home. Once you’ve established your goals, make sure you’re committed for the long term. It can be hard but try not to panic when the stock market fluctuates. Remember, it’s about time in the market, not timing the market!”
Bola Sol, the author of How To Save It: Fix Your Finances, also shared some golden advice as she told us: “Don’t be afraid to take risks. Too many women have been playing it safe far longer than they should.”
Remember that when you invest, your capital is at risk. So, to begin with, you should only invest the money you can afford to be without. While taking calculated risks can be rewarding, you don’t want to gamble your house deposit on the promise of a high-performing stock. No one can predict how the stock market will perform with 100% certainty.
If you’re not ready to part with your cash just yet, several investing platforms will allow you to create a virtual portfolio so you can get a feel for the medium and gauge your risk appetite.
There is a wealth of information at our fingertips, now is the time to use it. Here’s to claiming our financial freedom in 2021 and beyond!