Why more ladies need to invest and how to start!

I am in no way a financial advisor and therefore nothing I say should be taken or relied upon as financial advice. Instead speak to the experts which I’ve mentioned below.

Please see glossary at the end for any highlighted terms.

How to get started with investing?

As mentioned, I am in no way a financial advisor and therefore nothing I say should be taken as financial advice. However, as a woman who has recently started investing, I will provide 3 key tips below to help get started:  

1. Get money educated – learn simple money terms and practices

2. Immerse yourself in money talk – listen and learn from experts every day

3. Spend less, save more – practice good financial habits to get prepared for investing

Property tends to be characterised as bricks and mortar, a building which is owned as a tangible asset. However, I personally understand property, not solely as a thing or entity in itself, but more as a power relationship between a person and a resource. When thinking in these terms, the amount of capital someone possesses needs to be improved if they want to increase the amount of assets, and consequently the amount of power, they possess. In this way, the ability to invest and earn more is a very worthwhile and necessary topic to explore, for women interested in property.

As previously discussed, women are less likely than men to be able to afford a home. This has only worsened since Covid with women being twice as likely to lose their job, and one in four women experiencing an average drop in income of £463 a month. Furthermore, more women took on the primary responsibilities of childcare whilst working at home and were more likely to have their workflow interrupted, even if they were the higher earner within the family.

These factors all culminate in explaining the 15.5% gender pay gap across all employees (7.4% across full-time employees). However, there are actually more ‘gaps’ materialising, which are of more concern. Firstly, the gender pension gap remains at 47%, with women ending up with significantly smaller pension pots, despite more often having greater responsibilities (and financial obligations) for looking after children and parents. Research suggests, that currently women in their early 60s have on average £36,000 in their retirement pot, whilst men at the same age are able to enjoy an average pot of £142,000..  

Secondly, there is a gender investment gap – a £15 billion gap, where women overall invest 40% less money than men do.  One in five women choose to invest compared to one in three men, suggesting that women are NOT committed to investing  in the same way as men. A general rule to evidence this is that women choose to save more in Cash ISAs rather than investing it through Stocks and Shares accounts, which end up with much lower returns over the years.

There are numerous reasons for this disparity, including women lacking confidence and having a feeling of being financially illiterate (see Fearless Women Report), believing they are unable to understand banking and other financial terms. This is not aided by the fact that banking and investing literature has tended to be written in a way that appeals more to men.

Furthermore, women have historically been told, and reinforce within themselves, the narrative that ‘they are bad with money’, that they spend too much on frivolous things such as shopping and that they’re unable to handle their own finances. Interestingly, this is provably false, with a recent study showing  55% of women plan the day-to-day spending, versus 31% of men, and 46% of women are responsible for sorting out short-term savings, against 28% of men (other participants did not state their gender). Women are actually, very good with managing money – they just don’t invest it!

Why should women invest?

  • Earn more money

Investing is the most efficient way of growing wealth over time. Although of course, there is ALWAYS risk with investing, the returns can be very worthwhile, typically on average between 5-10% as opposed to the current base interest rate of 0.1%.

With interest rates being so LOW post-covid, it’s now more important than ever to invest any savings, as if the interest rate is less than the inflation rate, your money actually loses value.

  • Own property

Property is one of the most expensive assets that most people will own in their lifetime, and it comes with a high start-up cost: the deposit. Although some people will be able to rely on Bank of Mum and Dad (who paid out a whopping £6.3bn for house deposits in 2019), many don’t have that option and thus will need to find other ways of acquiring the down payment. Investing (although only really recommended for long-term returns i.e. 5+ years) can be a great way to maximise wealth in order to own property.

There are also other ways to own property aside from being a ‘homeowner’. Residential properties provide a continuous stream of income through rent and there are also options to invest in property funds through Real Estate Investment Trusts, or “REITs”. These are investment funds that solely invest in properties, so you own shares in a property fund, but don’t own the property outright.

  • Long-term financial security

Investing is a long-term game with people who choose to start early, and diversify their portfolio, often receiving the best return on their investments. The benefit of this is it provides future financial security which can be drawn upon later on in life, perhaps in retirement or for other life changes. This security is invaluable and can remove a lot of the fear and stress people have about being able to afford their lifestyle. For women, especially, being financially secure can provide independence and allows options when situations change (e.g. time out of work for having children.)

If nothing else persuades you, recognise that men are already doing this! Why should we let them have all the fun, while we miss out on the ability to maximise our wealth and live the life we want to live, financially?

How to get started with investing?

As mentioned, I am in no way a financial advisor and therefore nothing I say should be taken as financial advice. However, as a woman who has recently started investing, I will provide 3 key tips to help get started. At the end, I’ve linked some excellent resources that I have used along the way, whilst embarking on this exciting, new territory of Investing….

  1. Get money educated

Becoming confident with money, the lingo and how to manage your finances is paramount before investing. I personally joined an excellent, female-driven course Million Dollar Year which has taught me invaluable lessons about my relationship to money, how to manage my finances and shifting my attitude to ‘earn more and spend less’. Although some may view the monthly fees as expensive, I personally found this course to be worth every penny, as a means of investing in myself and providing invaluable confidence when tackling my money issues. If interested, use the coupon code FRIEND to receive $100 (around £70) off and quote Lady of the Land blog!

However, there are also less costly options through podcasts and ‘money influencers’, many who provide direct advice for issues faced by women. Please find my favourites below:

Podcasts

“Money Influencers”

  • Immerse yourself in money talk

Through the above resources, I would recommend tuning into money news every day. Keep your eyes open for articles/ blog posts discussing money management, investment, finding new ways to budget so you can increase savings etc…. Get daily reminders through apps, in order to keep you focussed on money goals and know what new products are out there. Try some of the following:

Daily updates/ Resources

  • Spend less and Save more

In order to invest, you first need to be financially secure. You must pay off any high-interest debts e.g. credit cards, loans etc… Many experts then advise growing an emergency fund of around 3-6 months of your ‘need costs’, in order to be protected from any unexpected emergency payment. This is all achieved by setting realistic savings goals, and by limiting spending within your monthly means. Once these steps are completed, you’re in a great position to start investing.

Essentially the biggest tip is to be brave and start investing early as the longer you leave your money invested, the more likely your return will be higher. This is the beauty of compound interest!

Glossary

  • Base Interest Rate: The Bank of England explains this is the “amount you pay for borrowing money, and the banks pay you for saving money with them.”
  • Compound interest: is the addition of interest to the original sum of money as well as to any existing interest, or in other words, interest on interest

e.g. Year 1: 1% interest rate of £1000 = £1010

       Year 2: 1% interest rate of £1010 = £1020.10

       Year 3: 1% interest rate of £1020.10 = £1030.30

  • Inflation Rate: the rate at which prices increase over time, resulting in a fall in the purchasing value of money.
  • Portfolio: a range of investments held by a person or organization.
  • REIT: Real Estate Investment Trust, investment funds that solely invest in properties.

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