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A Rallying Cry for Female Investors

Editor's Views:  At no point in their lives are women told that investing is for them - that has to change, says Morningstar.co.uk's Holly Black

Holly Black 11 October, 2019 | 11:33AM

editor

It’s incredibly frustrating that in 2019 we still need to have conversations about why women don’t invest. But JPMorgan research this week found that women lack the confidence, the time and, frankly, the inclination to do so.

Why Investing Matters

This blows my mind for so many reasons. Firstly, women are generally in charge of the household finances. Now, if you can make sense of a dual-fuel tariff, honestly? Investing is going to be child’s play. If you can shop around for the best insurance policy, you can find a decent fund. And if you can switch your mortgage at the end of its term, you can definitely move your Isa to a cheaper provider.

But it all comes down to confidence. At no point in their lives are women told that investing is for them. Sure, they’re told to open a savings account and maybe taught about the importance of budgeting, but investing? Not so much. And the industry seemingly does everything it can to perpetuate that and keep women out.

But it is so incredibly important that women invest.

Why? Two mammoth reasons:

Women typically earn less.

And, they are more likely to take career breaks to raise a family or care for relatives.

What does toxic combination mean? Less money going into women’s pension pots and for shorter periods of time. And, as we all know, that means less time for compound interest to do its magic and BOOM women end up, not only having less money through their working lives, but also in retirement too.

How is that fair?

Women of the world: you are fantastic investors. You are patient, astute and willing to do your research – study after study has shown that we trounce men when it comes to this stuff. Revel in that fact. Enjoy it with a smug smile on your face as you open a stocks and shares Isa or up your pension contributions and then make – probably excellent – decisions about where to put your money.

And then pass that on to your daughters and granddaughters and tell them to get investing too. Because the only way we change this stuff, the only way we stop being forced to have conversations about IF women SHOULD invest, and WHY they DON’T invest, and WHETHER they are GOOD investors, is by starting today.

The Impact of Investing

You might not fancy yourself as the next Greta Thunberg or even consider yourself as particularly engaged with environmental or political issues, but the chances are there are a few things in life your feel passionate about.

This week is Good Money Week and, as you’ve likely noticed, we’ve been focusing on all areas of sustainable investing. While that might be a turn-off for some investors who just want to maximise their financial returns, the sheer breadth of topics we’ve looked at this week really shows how environmental, social and governance (ESG) factors touch all aspects of our lives. Whether you’re investing in infrastructure, have a penchant for private equity, or want to back commodities firms, there are ways to invest sustainably and, crucially, help encourage change for the better.

Yet, still the myths about ESG investing persist: you must sacrifice returns, there aren’t enough options, ESG isn’t for me. Research from Rathbone Greenback this week showed that 74% of investors knowingly invest in stocks that conflict with their values. That is not only bonkers, it is entirely unnecessary. Even if you just want to put your money in an index fund you can choose a socially responsible one without sacrificing either your returns or your ethics.

ESG issues are definitely moving up the agenda, and that’s great, but now we need investors to put their money where their mouth is.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Holly Black  is Senior Editor, Morningstar.co.uk

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