The investment glass ceiling

By Scott Murphy

Why do women invest less than men?

Today marks International Women’s day. The day has been marked for over one hundred years and the theme this year is “gender parity”. This set us thinking – how do men and women compare when it comes to investing?

Our customer data shows that currently two-thirds of our investors are male and one-third female, while 60% of borrowers are male and 40% female. We conducted research amongst the general public to investigate the issue further. We found that more generally men are significantly more likely to own investment products (66% of men compared to 48% of women), indicating that women may be missing out on potential returns relative to men. Women are more likely than men to hold their own savings account (62% compared to 55%), but half as likely to hold stocks and shares (23% versus 11%).

When deciding what to do with money left over each month after paying for living expenses, men and women save around the same proportion of it (one-third), however, men invest twice as much of it compared to women (6% of disposable income for men in contrast to 3% for women).

The research also gives some clues about potential explanations for the gender investment gap.

Complexity appears to play a part: just one in twenty women (5%) say that they are comfortable with investment complexity – compared to three times as many men (15%). A third of women (31%) say that any degree of complexity is enough to put them off investing, compared to less than a quarter of men (23%).

Risk appetite may also be an important factor, with women almost twice as likely as men to describe themselves as “strongly risk averse” (28% compared to 15%).

Women are also less likely than men to say they understand investment products. Around half of women say they understand stocks and shares compared to three quarters of men; a quarter of women say they understand peer-to-peer lending compared to four in ten men; and six in ten women say they understand pensions compared to more than three quarters of men.

To continue the debate after International Women’s Day we’re hosting an event to explore in more detail why more women aren’t investing, what impact this has on their finances and what can be done to encourage greater involvement and engagement. More information can be found here.