When it comes to savings and investments, a significant and widening gap between the habits of men and women has been revealed in research conducted earlier this year by Duncan Lawrie Private Bank’s 2014 Gender Wealth Gap Index. The average woman holds just £2,000 in bank accounts, savings and investments, pensions and ISAs, compared to men who hold £7,732 – a difference of nearly fourfold. In 2013, the difference was only twofold – £6,000 for men compared to £3,000 for women.
Some of this disparity may be due to men managing money on behalf of their spouse and other female family members – which is not identified in the data – but the general trend is clear. In addition, the bank’s Index – compiled using data from a YouGov poll of over 2,000 UK adults – reveals that men tend to take more risks and manage their own investments to a far greater extent than women, who prefer to seek help from a financial advisor. Over one in four women choose to delegate to a financial advisor, compared with less than one in five men. Similarly, while only 24% of women with investment portfolios identified themselves as DIY investors, a full 37% of men say they shop around for the best deals on investment markets.
Investor Numbers Rising
Investor numbers are rising among both men and women but the rate is growing more quickly for men – up to 29% from 27% last year, compared to a 1% rise for women from 18% to 19% over the same period. In addition, a willingness to take on more risk is also increasing among both sexes – 8% of men and 4% of women described themselves as ‘risk takers’, up from 5% and 1% respectively in 2013. However, these numbers are still small compared to the 27% of women and 22% of men who favoured taking a cautious approach.
Types of Investment Vehicle
When it comes to choosing where to invest their money, equal numbers of men and women cite property as the number one option. 43% of both sexes rated this as the most attractive investment vehicle, up from 34% of men and 39% of women in 2013. This spike may be explained by the dramatic increase in house prices over the previous twelve months, particularly in London and the south-east, but also across much of the UK. After property, however, preferred investment vehicles show significant gender differences. For example, only one in four women said they would choose to invest in UK stocks and shares. This is far less than the 41% of men who would do so, making equities the second most preferred vehicle for men after property.
A Growing ‘Savings Gap’
While the bank’s Index data shows the number of UK investors among both sexes creeping slowly upwards, the rate of increase will not be fast enough to satisfy policymakers concerned about the UK’s growing pension shortfall. Almost half of respondents – 49% of women and 45% of men – said they put none of their income into investments or pensions. The government is leading the way in encouraging greater saving among UK adults through initiatives such as automatic workplace pension enrollment and an increase to £15,000 in the annual tax-free savings allowance through the Super ISA.
With a growing gap between people’s savings and the financial requirements of a comfortable retirement, the data reveals the need for more education on how investment vehicles can help all savers and investors to grow their money. With interest rates on standard savings accounts stuck at below-inflation levels, those looking to increase returns on spare income will need more guidance on the range of investment options available – including stocks and shares, bonds, peer-to-peer lending (P2P) and more.
If confidence is an issue for a lot of investors, male or female, whether they’re looking to expand their portfolio or just boost their existing pension pot, though they aren’t covered by the FSCS, Peer-to-Peer platforms can offer cautious investors varying degrees of stability and safety that could make them much more confident in investment options. Wellesley & Co. are regulated by the FCA, and offer investor’s security over property as every loan is secured against property. Furthermore, the company also have a Provision Fund that acts as investor’s compensation if a borrower defaults. They are also the only P2P platform that commits their funds first in every loan made, sharing and diversifying the risk.