It is a sad fact that women invest less often and less – a recent poll found that 70% of women reported they have no investments. Couple that with us living longer and we have a serious problem. Many sisters will live in poverty when older and that is a personal tragedy, a family problem and a social disaster in waiting. The reasons women don’t invest are a complex mix of emotional psychological, educational and structural. Here I give you five lame reasons to ponder, and if you are a woman you must work to overcome. If you are a man, support your partner to start investing.
‘I save but don’t invest’ – my colleague said. ‘I just can’t afford to lose my money.’
I had just been telling her about my stocks and shares ISA with Nutmeg; and my little experiment with Vanguard.
I was puzzled. How is it possible that a highly educated, well earning woman keeps her money in savings accounts and has no confidence to invest? So, I started asking around.
It turns out that 90% of my female friends and acquaintances don’t invest. This is not all; for many women investing is as alien as meeting ET face to face. Some of my friends invest but they have generally delegated responsibility for their investments to over-priced investment brokers; this naturally means that they may be better off keeping their money in savings accounts, anyway.
This made me think. I’m surrounded by professional, empowered women and they have very little consideration for their financial future. Yes, they have made contributions to a retirement plan, but the way these are going…
Then I started checking this out. It turns out that:
Men are about 20% more likely to invest in stocks and shares ISA. Women still prefer cash ISAs.
Only 20% of women have ISAs.
Apart from that, women’s financial literacy leaves a lot to be desired. A study of retirement income literacy found that 80% of the women approached couldn’t answer the quiz questions.
To top it all off, women are paid less than men for the same work; and we put up with it.
I don’t get it, you see.
- Women win wars, but they don’t invest in their future. (Yes, we do. While men are out winning battles we grow food, raise children and keep the economy going. Then men come back.)
- Women win Nobel prizes (Maria Curie-Sklodowska) but don’t invest.
- Women invented the dishwasher (Josephine Cochrane, 1886) and the windscreen wipers (Mary Anderson, 1903), but can’t understand investing.
- Women were critically involved in every Covid vaccine but they keep their money in cash accounts.
- Women can outperform men as investment fund managers, but we can’t invest our own money.
Now you see, why this whole ‘we are women, we don’t invest’ thing sounds to me like a big, fat lame excuse.
Please don’t feel offended, if you don’t invest. I didn’t invest until about ten years ago.
Still, it is time to wake up, face your excuses and bust them one by one.
Remember, you were born to be a successful investor, you just ought to change the way you think about investing, learn the basics, lose the fear and trust in yourself a bit more.
Here are five excuses women don’t invest. These are lame but very powerful.
#1. My husband looks after the money
Yes, I tried this one as well. It didn’t end well for either of us and as a couple, we ended up in a lot of debt.
Even if your man looks after your money better than mine did, your trust may be misplaced.
Sh*t happens, friend. Remember that 42% of marriages in the UK end in divorce. This is almost one in two, girl. Why would you think that your husband looking after your money is a smart idea?
I can tell you what my mum told me (a good Bulgaria communist she was):
‘Every woman must have at least eight sets of outfits and should make sure she can thrive without a man.’
So, stop offloading responsibility for your future to your man and take charge.
#2. I don’t have enough money to invest
Another excuse so women don’t invest.
There is no such thing as ‘enough’ money when it comes to investing. I never have enough.
What I have is money left over after I’ve taken care of my life necessities. This may be £1,000 or it may be £5. Doesn’t matter: it all goes on my investments.
Putting on the side small money is way better than doing nothing. You’d be surprised how fast your investments will start to grow.
There are also platforms for micro-investing; MoneyBox and Acorns spring to mind.
#3. I can’t afford to lose my money
This is a very widespread excuse, so women don’t invest. It comes naturally to us women because, according to research, we suffer more often than men from loss aversion (this is fear of loss and can manifest in relation to anything).
There are many ways to deal with this excuse and to reduce your loss aversion levels. One is to invest in index funds, digital wealth managers and other composite investment instruments – this way the risks involved in value stock investing is statistically reduced (you are buying not shares in one company but in a sizable chunk of the stock market).
Next, you’d have to remember that correction (market going down) are part of an investor’s life and the market has historically always bounced back. So, in the long run, you are unlikely to lose your money. (There is a bit more to this, but I’ll tell you about it some other time.)
You also need to start thinking. I’m willing to bet that you keep your money in a savings account at below 1% interest. Last I checked, inflation is running at 3%, give or take. Do you know what this means? It means that you are losing at least 2% of your savings guaranteed; no ‘ifs’ and ‘maybes’ about it.
Don’t be a victim of this excuse so women don’t invest. It doesn’t make sense.
Are you willing to have a go at investing now?
#4. I don’t know enough about investing
This one held power even over me (I’m not arrogant; I really know a lot about a lot).
Here is the good news: even if you are right and you don’t know enough about investing, you can learn.
Today, with the advent of digital wealth managers (also known as robo-investors) investing has become a fairly ‘low cost’ entry endeavour. You need to learn some of the basic rules of investing and you’d be good to go.
We should also remember that, as Warren Buffet said, at the end, there are only two rules of investing:
Rule1: Never lose money; and
Rule 2: Never forget rule 1.
Easy, isn’t it?
#5. I can’t understand these numbers and graphs
Now, I’d like to let you in on a secret.
This excuse was created for us by men (by presenting investing as really complicated and near impossible to comprehend). It has a dual purpose:
#1. Raises artificially the entry-level so women don’t invest (just in case we beat them in this game as well, you see); and
#2. Helps maintain the myth that investing is highly scientific and that investment analysis is reliable.
Honestly, graphs can be useful, but they are only part, and not the most important part at that, of investing.
Today, you can invest even if you don’t understand the graphs; or the maths.
Today, investing for your future is more important than ever.
We, women, live longer and invest much less than men; which is a big problem.
Thing is, investing women do very well but we’d rather stay with the belief that women don’t invest.
In this post, I gave you five excuses that ensure women don’t invest. Don’t just read them and agree – or not – with me. Use it as a checklist; target and demolish each, and all, of these excuses.
Need help? Don’t hesitate to get in touch – I’d gift my time to help and support ten women to start investing.
Do you invest? Why?
(Last edited 10th February 2022.)
14 thoughts on “5 Lame Excuses so Women Don’t Invest”
It’s risk aversion i think – women are less likely to take chances. this is nurture not nature! Women are brought up to want security and don’t understand that, sometimes, to be secure yu have to take risks.
@Rebecca: Actually, research coming from Manchester University of all places, shows that it is a combination of loss and risk aversion. I chose to talk about loss aversion and ‘I’ll lose my money’ here because risk aversion is a bit more tricky – with risk is it a continuum between ‘risk nihilism’, through ‘risk awareness’ to ‘risk aversion’. Will tackle separately.
What a fab post Maria..some of the statistics are so scary. Women get investing!!
@Lynn: Yes. And I’m still waiting for women to make good on my promise to help 10 early birds to start investing. Spread the word, if you think it worth it.
I absolutely invest. I started when I knew nothing (and I knew I knew nothing!) and learned along the way. I assumed that it would be better to put the money in and get in the investing world while I learned than it would be to wait until I learned “enough” because honestly, there’s always going to be something I don’t know enough about! Totally naive but it did work out better than expect.
@Revanche: Not naive, my friend. I also believe that it is better to start and learn than wait till you feel you know ‘enough’.
Those statistics are scarily low – it would be nice to see them raised! I hope the rise of robo-investing may encourage more women to dabble… Great post Maria.
@Emma: May be ‘investing is not that complicated’ is a good message to get out there. Developing coping strategies for ‘loss’ and ‘risk’ aversion is much harder. Even now I get a knee-jerk from time to time (don’t act o it but…)
IS your offer to help 10 women start investing still open? I’d like to take you up on it, please.
Aarti: Yes it is. Please send me a private message on email@example.com
Only just come across this excellent post and among my friends (who work), I’m the only one who invests. The others indirectly invest when they contribute to their company pension schemes but many of them have decent savings, exceppt it’s all in cash. The most common excuse is that they can’t risk losing all their money and that’s because they get caught up what is reported in the news, where it seems like people can only invest by winning big or losing big. Index tracker investing after all isn’t very sexy and doesn’t generally make the headlines, except in financial news, when Buffett is involved in $1m bets!
I try my best not to nag at my friends but will continue to try to get them interested in investing. I need to mention inflation more, about how their cash savings is worth less and less!
@Weenie: You just mentioned something very important, friend. Writing on investing does drift into the heroic and reports only the big gains or fails. One more symptom of a male dominated industry. And I think that we should talk to women as women; tell them that investing yields best results, and much more consistent ones, when our ‘feminine’ characteristics come out to play. Characteristics like: patience, consideration for the long term, preparation and research, necessary level of caution and conviction without over-confidence.
Ooooooh, I love this article! Really great ‘excuses’ that we need to just get over and start doing.
@Natalie: Glad you enjoyed it. Wish more women just start doing it :).