Why are we so afraid of investing?
The Story
"Only 10% of British women have a Stocks & Shares ISA, compared with 17% of men"
What’s up with that?
Whilst saving accounts are the best way to reach your short-term goals, long-term investments often bring better returns. Ladies, we’re seriously missing out!
Why are we less likely to invest?
We know, we know, you’ve heard it many times before. Our earnings are depressingly lower than men’s on average. But that’s not the only reason (and here’s hoping it won’t be one at all in the near future). Focus groups have looked into women’s attitude to the finance industry and frankly we find it unwelcoming. With so much information to wade through it’s impossible to know where to start and who to trust right?
What about the risk?
Well, many women are good savers and have a work pension but don’t personally invest in the stock market. That’s because we’re more cautious about taking risks. We’d rather guarantee we won’t lose all our money than make a huge profit. However, when it comes to buying property women will happily sign on the dotted line. Surprised? We sure are. Especially since this involves taking on debt and huge fees making it even riskier than many other investments.
MOXI’s theory is that women prefer to invest in what they understand. We can explore a house before we buy it, get our head around the fees, look at property market trends and know how we’ll gain in the long-term. You can do this with stocks too. Alright, so you can’t actually ‘see’ a stock but it’s possible to understand the the fees, trends and profits, and that long-term stock investments may bring you more wealth than buying a property.
How can I start investing?
Drumroll please….with your pension! The money you put into your pension pot goes into an investment fund. If you don’t know which fund your pension is invested in and how much you’ll get in retirement you need to read this guide.
Once your pension is sorted and you’ve got spare cash to invest, you can start investing with as little as £100. The three main ways to invest are to lend your money in return for interest, buy shares in a company or buy into a fund, which is like buying a goodie bag of different investments. Check out our beginners guide to investing for more on this.
Why not put all my spare cash into a pension?
There’s nothing stopping you from doing this and pensions may be the best saving you’ll ever make but don’t forget – you can’t access your pot until you’re 55. That’s a long time to say siagnora to all of your hard-earned extra cash! Even worse, there are restrictions on how much to take out each year to make it tax-efficient. So by spreading your money far and wide in different investments you could plan to get additional cash injections in your 40s or 50s. Hello holidays!
How do I know if I’m ready to invest?
It’s actually really simple. First clear your debts, have a rainy-day fund and cover your near-term saving goals. Try our Ready to Invest tool to help you plan. Only the spare cash you save above all of these things should be invested. Smart investing involves devoting your money for the longer-term; a minimum of 5-years is a rule of thumb. And be warned, similar to a house deposit, never put cash that you need in the near-term into the stock market.
