27 February 2024

    International Women’s Day – closing the investment gender gap

    Amanda Ng

    Senior Client Adviser (Christchurch)

    Amanda Ng

    Senior Client Adviser (Christchurch)

    International Women’s Day is on 8 March and this year the theme is ‘Inspire Inclusion’. To support this, we asked Senior Client Adviser, Amanda Ng for her thoughts on how to close the investment gender gap.

    The investment gender gap

    In recent years, significant strides have been made towards gender equality in various spheres of life.

    Getting a home loan was particularly difficult for single women up until the 1990s unless you had a male relative guarantee the loan or paid a larger deposit. Fast forward to today, CoreLogic’s New Zealand Women & Property 2023 report found that men were associated with ownership of only 0.5% more homes than women, which works out to be 8,149 more properties.

    While the property gap is small or closing, an outstanding gap persists between men and women when it comes to investing and financial planning.

    This is called the investment gender gap, which refers to the disparities between men and women in terms of investment knowledge, confidence, and participation in financial markets.

    Women already have the odds stacked against them with a gender pay gap, the decision to take career breaks while they raise children, and a longer life expectancy to fund in retirement.

    This ultimately makes it more difficult for women to build wealth and financial security over the long term.

    Studies have consistently shown that women tend to hold more cash, invest less in the stock market, and have lower retirement savings compared to men. However, this self-doubt about investing is unwarranted when you look at the facts which show that overall women are better investors than men.

    Fortunately, with awareness and strategic action, women can take steps to bridge this divide and build robust retirement savings.

    Here, we'll explore how to close the investment gender gap and offer four essential finance tips to help women boost their investing confidence.

    1. Educate yourself about investing

    When you’re starting out as an investor, a good first step is to learn some basic investing concepts.

    You could begin by learning about diversification (not putting all your eggs in one basket), compound interest (earning interest on top of the interest you’ve already earned, as well as your deposit), asset classes (such as equities, bonds, cash, property, etc) and the main types of investment products (such as KiwiSaver or Managed Funds).

    Women can also empower themselves by seeking out literacy resources, workshops, and courses – the Sorted.org website is a great place to start with a huge range of tools for everything from tackling debt and budgeting, to retirement and KiwiSaver.

    Understanding basic financial concepts can help you make more informed decisions about your investments.

    2. Give yourself a buffer

    Building a financial safety net before you start investing is essential for weathering unexpected expenses and economic downturns.

    The amount of money you should aim towards saving as a buffer can vary depending on your individual circumstances, financial goals and risk tolerance.

    While there isn’t a one-size-fits-all answer, it’s generally recommended you have three to six months' worth of living expenses as your emergency fund.

    Investing always carries some level of risk and saving for retirement should ideally be done with a long-term perspective. So, by having a savings buffer, you can reduce the likelihood that you’ll need to sell investments during market downturns to cover expenses. This helps to mitigate the risk of locking in losses which could lead to potentially missing out on long-term gains.

    3. Be consistent

    Consistency is key to building wealth over time. Set a realistic savings goal and commit to contributing regularly to your investment account.

    Even small contributions made regularly can grow significantly over time due to the power of compounding. Automating contributions can make saving easier and more consistent.

    Stay focused and disciplined in your savings habits to pave the way for a secure financial future.

    4. Seek advice

    Financial Markets Authority research found women are more likely than men to be uncertain about what type of KiwiSaver fund they’re in, and about whether their fund is good value. They’re also more likely to say they haven’t checked if their KiwiSaver is on track to produce the income they are planning for in retirement.

    At Fisher Funds, we have an in-house team of friendly advisers who can help you review your KiwiSaver or Managed Funds investment to make sure you’re on track to reach your investing ambitions. Get in touch with our team if you’d like some advice on your investments.

    It starts with action

    Every year we celebrate International Women’s Day which raises awareness but also provides us with an opportunity to reflect on how far we have come.

    A promising study by Fidelity Investments showed that investing is particularly popular with the younger generation of women, with 71% of Millennial women surveyed investing outside of retirement, compared to 67% of Gen X and 62% of Baby Boomers.

    Furthermore, another Fidelity Investments study shows the retirement savings gender gap has improved with 68% of women surveyed saving for retirement in 2023, compared to 77% of men, whereas in 2019 only 66% of women were saving for retirement compared to 82% of men.

    Closing the investment gender gap is imperative for fostering financial equality and empowerment among women of all generations. Together, we can strive towards a future where all women feel empowered to take control of their financial futures.

    Talk to us

    If you’ve got any questions about your investment or need some help to make sure you’re on track to reach your goals, our team are happy to help. You can call us on 0508 347 437, chat with us online, or drop us an email.