As Charlotte Yonge sorted through boxes of her grandmother’s things this year, she found a pile of handwritten share records from the 1970s. It triggered a memory: when she was young, Yonge had always seen women as the ones who invested, as her grandmother had throughout her life.
But as she grew older, Yonge realised she was relatively alone in this assessment. In most homes, men handled the finances, and on a professional level, men were the ones that took on careers in the field.
It was something that Yonge, a senior fund manager at Troy Asset Management, did not understand. “Loads of my friends could have been really great investors if they’d had access to it. And when I talk to them, sometimes I think they’re quite interested, but they just never had the information. For me, it was becoming aware of an anomaly that didn’t make any sense,” Yonge says.
While Yonge saw a hesitation among women to become investment professionals, she also recognised a hesitation among women to invest altogether. These reservations have led to a disparity between UK men and women’s investments that equates to the GDP of Sweden: £567bn. According to a 2024 report by Aviva, men are almost twice as likely as women to invest in a stocks and shares Isa, Sipp or general investment account.
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Camilla Esmund, senior manager at interactive investor, says: “The reality is that shying away from investing can severely limit your financial potential and stability. Stockmarket investments have a strong track record of producing inflation-beating returns that far outstrip those of conventional savings accounts, albeit with higher risk.
“Whether it’s buying a home, funding your children’s education or ticking off items on your bucket list, not investing can make these aspirations harder to achieve due to the lack of substantial growth on your funds. So – fundamentally, if even fewer women are investing – there will be fewer women having long-term financial security, and fewer women reaching their financial goals.”
Wasted opportunity
The drawbacks of women investing less is not limited to a personal level. It means there is less money throughout the market and, from a management perspective, a loss of clients.
Maxime Carmignac, chief executive officer and director of Carmignac UK, says: “It’s a huge mistake, because it’s having a negative impact on women, on society and on the industry.
“All this money now is in cash. It’s not invested, which means it is not benefiting the system. It is a wasted opportunity, also for wealth and asset management, because no fees are being made on this wealth. Also, it is not compounding.”
The effect could also spread beyond the quantity of investments to the quality.
“All women are different, but we read some studies saying women are more likely to be long-term-driven, more sustainability- and more purpose-driven. Therefore, I think it would change the allocation,” Carmignac says.
Mooka Maboshe, money coach at Octopus Money, adds: “More women investing means it’s good for the economy as it allows businesses, governments and institutions to be able to grow and use those funds in a way that is in line with their values, especially if you’re thinking about more ethical investing in ESG options.
“Using this strategy for investing means women can put their money to work. They can help the economy grow as a result, and they can do it in a way that aligns with their values and the way they want to shape the world. Companies that align with those values can show them that, not only is the money growing for them but it’s also growing in a way that’s good for the environment.”
Currently, though, the shift is simply not happening. While the imbalance has many different roots, it has become clear that while women are saving, they are not necessarily investing.
Eighty-eight percent of women hold a savings account, according to the Schroders Women & Wealth Report, yet just 26% of women have a stocks and shares Isa. Thirty-three per cent more women invest in cash Isas than men, according to the HMRC, but this money is not compounding.
While sometimes this can result in fewer shakes when the market dips, it also harms overall returns. According to a report by Vanguard, if an investor maxed out the allowance of their Isa for the past 25 years, the total for that money invested in the MSCI World index through an Isa would be £898,361. That same money put into a cash savings account would total £360,019.
Katie Nutting, financial planning director at Schroders Personal Wealth, says: “Women are still generally behind their male counterparts when it comes to investing. There are a number of reasons why this happens and it’s likely to take years for women to close this gap, particularly as we know the importance of compounding when it comes to trying to grow your pot.
Read the rest of this article in the March issue of Portfolio Adviser magazine