In summary

Are you saving instead of investing? Discover why many women shy away from investing and how you can confidently begin building wealth today.

Our Wealth Manager, Rachel Evans, discusses why many women prefer saving over investing and how understanding this can help you take steps towards a balanced financial approach.

Saving vs. investing: Why many women do one and not the other

How often have we been told to save for a rainy day? While saving does offer peace of mind, investing opens the door to long-term growth. Yet, many women hesitate to take advantage of this opportunity. Understanding why women often prefer saving to investing and discovering simple ways to build investing into your financial plan are essential steps toward building wealth and securing your future.

The gender gap in investing

There’s no denying it: a gap exists between men and women when it comes to investing. A study by Fidelity Investments revealed that only 29% of women identify as investors, compared to 42% of men. This gap isn’t just a statistic; it reflects real barriers that many women face.

Let’s take a closer look at why some women might prefer saving and how you can confidently take steps towards a balanced approach that includes investing.

Reasons for hesitation

Risk aversion: It’s completely natural to approach financial decisions with caution. Many women feel a deep sense of responsibility when managing money, which can lead to a preference for saving over investing. While being careful with your finances is a strength, understanding and managing investment risks can make investing feel more accessible and less intimidating.

Confidence gap: Many women say they feel less confident about their investing knowledge. In fact, a survey by Merrill Lynch found that only 52% of women feel confident managing investments, compared to 68% of men. But it’s important to remember that confidence comes with experience. Taking small, informed steps can help you build the confidence you need to explore investment opportunities that can benefit your long-term financial health.

Impact of inflation

Inflation is a silent factor that can significantly affect your savings over time. While saving feels safe, it’s important to consider how inflation might erode the value of your money. For example, £10,000 saved today might not have the same buying power in 10 or 20 years. Investing, on the other hand, can help your money grow and keep pace with inflation.

Imagine investing that same £10,000 in a diversified portfolio with an average annual return of 7%. In 10 years, it could grow to approximately £19,500, showing the potential growth compared to saving alone.

The benefits of investing

Compound interest: One of the most powerful benefits of investing is the magic of compound return. The earlier you start, the more time your money has to grow. For example, regularly investing £150 a month into a portfolio with a 7% annual return could grow to over £184,000, in 30 years. Starting small and early can lead to considerable benefits over the long term, allowing you to take control of your financial future with confidence.

Retirement planning: Women tend to live longer than men, which means getting the right advice and planning for retirement is especially important. Investing is one of the most effective ways to ensure you have the resources you need to support yourself throughout your retirement years. By contributing to pensions or ISAs, you’re not just investing money – you’re investing in your future peace of mind.

Steps to start investing

Start small: When it comes to investing, you don’t have to jump in all at once. Starting small, perhaps with a micro-investing app or low-cost investment options, allows you to gradually build your investment portfolio. Even investing just £50 a month can help you ease into investing and gain confidence over time. Of course, you should take advice for your specific circumstances.

Balancing saving and investing: For most people, a healthy financial strategy includes both saving and investing, which work hand in hand rather than being mutually exclusive. While saving provides security for short-term needs and unexpected expenses, investing is essential for long-term growth. Consider carving out a small portion of your savings for investments and using a budgeting approach like the 50/30/20 rule – where 50% of your income goes towards necessities, 30% towards discretionary spending, and 20% towards savings and investments. This way, you’re prepared for both immediate needs and future goals.

Contact us

0203 418 0257

info@onekc.co.uk

References

Source: https://www.brooksmacdonald.com/individuals/resources/insights/transforming-savings-investments