The issue of the gender wealth gap hasn’t gone unheard in recent years.
We have seen women in Hollywood calling out their male counterparts for taking home three times their salary, the US & Australian soccer teams negotiating pay equality or else refusing to play at the World Cup, the staff trial against the BBC and many more recent instances that come to mind. We do know a few causes for this inequity between genders include lower salaries for women, career pauses for raising children and lower superannuation, when women will lose out on the beautiful effects of compound interest (it’s things like compound interest that Tilly Money will be explaining to you!) But a necessary part of any conversation is always the solution.
Despite these obstacles tipping the scale for women’s wealth, one key aspect that can often be overlooked is our reluctance to invest. A Merrill Lynch study found that 41% of women said their greatest financial regret was not investing more of their money – which is understandable considering how much women are set to lose from a lack of investment.
To outline the returns, here is an example of what you could be earning, listed on Refinery29:
Starting investment amount: $5,000
Annual Contribution: $2,500 (5% of annual salary)
At 65 you’ll have: $465,000*
*Based on an 8% rate of return.
So, if you were able to set aside $5,000 as an initial investment and only added an extra $2,500 every year, you would be set to accrue $465,000 in wealth after 34 years. That isn’t just a bit of loose change.
Despite the lack of women investing, research shows that females make better investors than males. Repeated studies have women consistently outperforming men by rates from anywhere between 1.8% to 0.94%. Males tend to take more of an aggressive and risky approach to the stock market, whereas women have a slightly more risk-averse attitude when it comes time to part with their money. This inherent caution actually proves to be a great tool for female investors, as they tend to research their investments a little further and pick greater value stocks or better long-term options. So with this in mind, don’t let any lack of confidence deter you from getting into investing.
The more that women avoid the stock market, for the illusion of safety with cash savings, the more men can reap all the returns from stocks and keep a firm grip on the world’s wealth!
Obviously, for a large percentage of us, there is no such thing as “spare money” lying around, waiting to be invested. But luckily, another area where women are shown to excel is in paying bills and managing budgets. If you have established a habit of saving, you can incorporate a new habit of investing a portion of your savings. By doing sound research and then putting this money into the stock market or an investment fund, you’re not actually parting ways with your money as it’s still considered an asset.
Personally, I have bought a few parcels of stocks on the share market and when I come to review my savings or need to collate my “assets” for any paperwork – I almost always forget my stocks! Then it’s like a welcome surprise that I have this money set aside, working away for me to accrue more wealth.
Considering our knack for budgeting and for reaping greater returns, if women were to start investing earlier and more frequently, we could do some serious damage to that ‘wealth gap.’ Also, if what they say about money being power is true, imagine a world where women have equal wealth as men…
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
