Whilst the number of women choosing to save into an ISA continues to increase** they remain cautious when it comes to taking the leap to invest, according to new research from Investec Click & Invest. The research, which polled both investors and non-investors (with at least £10k in savings) found that 1.8 million women are avoiding investing, choosing cash as the safer bet.
When asked about their attitude towards investing, over half of women (54%) associated it with risk with nearly two thirds (65%) choose to save in a cash product such as a cash ISA.
In contrast, only four in ten women opt to invest in a stocks & shares ISA. The associations were largely negative, with many women believing investing to be complicated (38%), scary (25%) or only for the wealthy (16%). Furthermore, the research shows that the general view of investing is that it is risky and unreliable. What’s more concerning is that only 5% of women believe investing is easy to understand. However, it seems that the fees associated with investing are not what is putting them off with only 26% believing it is too expensive.
|Rank||Women’s top 10 associations with investment||%|
|6||Accessible to everyone||16%|
|7||Only for the wealthy||16%|
|10||Easy to understand||5%|
Source: Research conducted by Opinium Research 20th – 28th February 2018
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By not investing, meeting financial goals could be more of a challenge for those people that aren’t confident making this leap. Investec Click & Invest has calculated the rate of return if an individual invested in the stock market or put money in a bank account over the period of 13 years from 1st January 2004 to 31st December 2017.
Whilst past performance is not an indicator of future performance, had they put a lump sum of £10,000 in a cash savings account (with no additional contributions over the years), the return would have been 32% resulting in £13,200. When adjusted for inflation, the final sum is £9,430, meaning a loss of purchasing power over the period of -5.7%.
On the other hand, if the same amount were invested in the stock market, the return on investment would have been as follows:
- A low risk portfolio: a 78% return resulting in £17,800
- A medium risk portfolio: a 123% return resulting in £22,300
- A medium/high risk strategy: a 151% return resulting in £25,100
Jane Warren, CEO, Investec Click & Invest comments: “It is normal to focus on the financial risks and loss associated with investments but often we do not think about the potential financial gain from investing in the stock market over the long term. Whether saving for a rainy day or to finally go on that dream holiday, in the current climate whatever your financial goal it is important to consider investing your savings to boost your pot. We know that women are more likely to feel negative emotions when it comes to taking financial risks than men, which is why we need to empower women with the tools, knowledge and confidence to take the leap to invest in assets that will grow their savings.”
As with all investing an individual’s capital is at risk and they may get back less than they invested.