How do you start investing money? As survey finds women less likely to feel confident about it than men
Female finance experts talk us through the key points. By Yolanthe Fawehinmi.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Less than a third (31%) of women feel confident about investing their money, compared with 44% of men, according to a new survey.
What’s more, 34% said they don’t have enough savings to invest, while 63% of the women polled admitted they wouldn’t know where or how to start the process anyway, the research by HSBC UK found.
Relatable?
“Women have never been taught to be as bullish as men,” says Bola Sol, qualified financial advisor and author of Your Money Life. “So they are not the first point of call when it comes to the notion of investing. Finance is still an old boy’s club and heavily male-dominated. And as a result, women won’t even dare to take the first step.
“Based on the gender and pension pay gap, women are sometimes afraid to make financial decisions – even if they are meticulously calculated.
“They are worried about who they can fall back on if things go wrong. Are they single? Or do they have a partner who works in the banking world? Do they have immigrant parents? What’s their class and demographic? Can they afford to take the financial risks? There are a lot of calculations going through women’s minds, so they just choose not to invest,” Sol adds.
So, if they find themselves in this position but are interested in learning more, how can women start investing?
Start with the basics
Claire Exley, head of advice and guidance at UK digital wealth manager Nutmeg, says if you’re employed and enrolled in your workplace pension, then the good news is, you’re already investing.
“Workplace pensions can be really valuable because there’s potentially two types of ‘free money’ on offer, contributions from your employer and the government tax relief,” explains Exley.
“For those looking to take the next step with investing, Individual Savings Accounts – or ISAs – are a good place to start if you have some extra money. ISAs have a £20,000 annual allowance with no tax on investment growth, and you can access your money at any point – but you should aim to invest for at least three to five years.”
Exley adds that if you’re new to investing, there are wealth management services who can assist. “You’ll answer some questions to help you understand how you feel about risk, you can choose an investment style that best suits you – for example, you may want to invest in a socially responsible way – and the experts will manage it for you.”
Don’t be afraid to ask questions
Marianne Oliver, operations director at Invest Engine admits that: “In this industry, we are really bad for jargon. You can have different investment types, with so many different names.”
Not only is it ok to ask questions though, it’s wise to do so. Investing carries a degree of risk, so you want to make the right decisions for you and be well informed before making decisions.
Sol adds: “You don’t need to pick investing up quickly. I’ve been studying finance since I was in college – so that’s for 15 years – and there are still some things I still struggle to break down into layman’s terms.”
Figure out where you want to invest
Exley says: “If you’re thinking about investing, you’ll have to decide whether you want to pick your investments and manage them yourself, or if you want to find a provider who will manage investments for you.
“The investments universe is very broad – you can invest in almost everything from a tracker fund, which is like a basket of lots of different shares, to more esoteric assets like wine or antiques. Traditionally, the main types of investments are equities, or stocks and shares, which means you hold a small portion of a company; bonds, which are like an IOU from the government or a company; and cash.
“It’s wise to hold a diverse range of investments, and the exact mix will depend on how you feel about risk,” she adds. “For example, equities can be more volatile, so you have to be comfortable with your investments rising and falling, while bonds are traditionally viewed as less risky. If you’re not sure, companies like Nutmeg can build a diversified portfolio for you.”
Set long-term goals
Setting goals and figuring out your real-life options helps inspire money confidence, which is needed to start investing.
“If you use that as a starting point, it makes investing easier to understand. When people think about investment, they think about the technical bits, tax and exchange-traded funds (ETFs). But it’s also important to manage your expectations and be patient,” says Rebecca Owers, director of wealth distribution for HSBC UK.
“Investing is more about where you want to be in life, and breaking [goals] down into simple thinking points. Take the best things from both worlds.
“When women want to start investing, they should approach it like learning a new language. Don’t you research the options that are available to you? Investing is no different. Women need to feel confident and dedication is a key part of that confidence.”
Be patient
It’s also important to manage expectations and be patient with your financial growth.
“You are not going to get rich quickly,” Sol adds. “The first time you invest isn’t the first time you make money. It’s rare. This is important for women to understand.”
For Oliver, there is some beauty in playing the long game: “It is like a snowball. So the bigger it gets, the more snow it attracts. If you can continue to regularly drip-feed it with payments.”
Make sure you have an emergency fundExley encourages all women to have at least three to six months worth of expenses saved, and this needs to be easily accessible, so if the unexpected happens, you have that security blanket ready.
“[But] beyond that, there are many schools of thought around how much of your income you should be investing, and there’s no one-size-fits-all,” she adds. “One rule of thumb is the 20/30/50 rule: 50% of your monthly income is spent on covering essentials, like your rent or mortgage, utilities and food; 30% on things you want, for instance, a gym membership or holidays; and the final 20% should go to savings and investments.
“However, in the current high cost-of-living environment, this simply might not be possible or realistic. Even making small regular contributions to your investments can really add up over time – we all need to start somewhere.”