In Focus: Advice for Women  

How to make young women 'conscious' investors

I would say, however, that auto-enrolment has made a real impact with young investors thinking more about their pension pots and retirement planning. 

There is also a clear distinction when it comes to shorter-term household finances and investing for the long-term.

Studies suggest there is much less of a gap between women and men when it comes to confidence in managing the short-term day-to-day household finances, whereas women, and particularly younger women, are notably less confident when it comes to long-term saving and investing.

Interestingly, women typically view savings and investment as separate decisions.

Women are also more likely to be ‘unconscious’ investors, for example they may be contributing to a pension, but not considering it an investment. 

Q: How do we get young people - young women in particular - to stop being 'unconscious' investors? And how can we get them out of cash and into stocks and shares? 

TA: As an industry, we need to shift the characterisation that investing is inherently “male”. Again, I think a lot of that comes down to education, both in regard to risks and rewards, but also in areas like busting the myth that you need to be wealthy to start investing. 

The data suggests women are often very disciplined about saving cash regularly. However, they may need more information about investing before they are persuaded to take their first steps into the stock market.

That said, this very discipline that I have seen many women apply to their cash savings often serves them very well when they do invest.

FTA: Are there still behavioural biases that hinder women as investors?

TA: Quite the opposite. I think women show behavioural biases that help them as successful investors.

Women trade less and tend to apply a long-term approach, without buying and selling into lots of the funds, which in turn helps keep costs down and improves their chances of investment success. 

In a recent Vanguard research paper on gender differences and investing, we studied over 4m Vanguard US self-directed retail investors.

Women traded up 50 per cent less than men and were more likely to hold their assets in balanced or target date fund. They were also a lot less active with their accounts – logging in about half as much as men. Those are positive trends!

FTA: Some studies have shown a wall of cash built up over the pandemic as younger people saved more. How can we encourage this habit to continue?

TA: I think this is a moment when advisers can really demonstrate their value. We have seen a rush of new investors into the market over the past 18 months, and they will need help and guidance.