InvestmentsMay 3 2017

Young women more financially astute than older women

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Young women more financially astute than older women

Younger women are more in control of their investments than older women but the gender gap still prevails, research from IP Global has found.

According to research, carried out globally among 6,007 women over 18, younger women are more likely to invest in stocks and shares than older women are, although overall women are less likely than men to invest.

The study showed women aged 18-24 were most likely to make investments with those aged over 55 being most adverse to doing so.

However, only 12 per cent of all UK women plan to invest in the next 12 months, 10 per cent less than men.

The investment industry could do a great deal to help older women feel more financially capable. Shelley Wren

Across the globe, women in all markets surveyed (UK, UAE, China, Hong Kong, Singapore) were 15 per cent less likely to invest than men.   

When they do invest, the research suggested, women tended to prefer tangible investments. In the 18-24 age group, women were most likely to invest in property in the UK (6.2 per cent) followed by stocks, shares and bonds (4.1 per cent).

Shelley Wren, global distribution manager for IP Global, comments: "Younger women may have had more exposure and discussion about finance at a younger age, and are perhaps a little more aware of their financial situation, especially in the UK."

Part of this is because more young women are coming out of higher education with student debts and therefore need to have some knowledge about managing their money, Ms Wren.

However, she added: "Yet most young people in the UK seem not to have an idea about how to make stock market investments or long-term financial planning."

This lack of financial confidence generally among women has been affirmed by research from the Pensions and Lifetime Savings Association (PLSA), which reveals that millennial (18-35 year old) women feel more financially anxious than their male peers.

Although millennial women have the smallest gender pay gap of 5 per cent of any age group, and therefore should arguably be at their most financially confident, 58 per cent believed they would save less than their parents were able to.

Of the 1,001 millennials researched, 55 per cent of young women were less optimistic about career advancement than men (at 61 per cent), and only 26 per cent of millennial women believed they could afford to buy a home, compared with 35 per cent of men.

According to Graham Vidler, director of external affairs, PLSA, women have traditionally been worse off in terms of pension savings, although auto-enrolment may go some way to evening the gap for young people.

He said: "Typically, women have had smaller pensions than their male counterparts but with the advent of auto-enrolment, more women are being encouraged to save than ever before.

"It is vital the lack of financial confidence among millennials does not discourage them from taking advantage of workplace pensions and falling behind when saving for retirement."

Ms Wren agrees. She adds: "There seems to be a lot of mystery around the technology and the jargon used when it comes to investments, and a little demystifying of the terminology would not be amiss.

"Younger women may feel more attuned to how to research financial matters, whereas older women may have never engaged with investments, whether personal portfolios or with workplace pensions.

"The investment industry could do a great deal to help older women feel more financially capable. Firstly, they could do more to bring more female investment managers and advisers into the industry to provide better engagement for female clients.

"It's not just talking to a woman from an advice perspective, but also from a risk profile perspective when it comes to managing the money.

"And, of course, removing jargon would help all people engage better with their investments."

Anna Sofat, founder and managing director of Addidi Wealth, commented: "There is a difference between younger and older women – younger ones are brought up to be responsible for their own financial well being and being independent.

"As such they are much more conscious they need to invest and take risk. Older women are much more likely to have been looked after by their parents and then their husbands – often they are used to being given a household budget and that’s their sole responsibility.

"So when they come to be responsible for money on divorce/being widowed, often they will be reluctant to invest in things they don’t know. Women who have been responsible for their own future, as many of my clients are, do invest and seek help." 

simoney.kyriakou@ft.com