Investing in a diversified portfolio of shares is one of the best ways to get ahead and create a meaningful boost to your long-term financial future.
It is one of the few areas where you can take a relatively small of money and grow it to a substantial amount with little effort. So, if it’s so simple why isn’t everyone doing it?
We know fewer women than men invest their money. Even as investing has become easier, cheaper and more accessible, women are more reluctant than men are to invest their money.
This is the issue we wanted to delve into at Stockspot. What stops women from investing? It’s a thorny question we wanted to try and understand and hopefully address for Australian women.
Women’s Agenda
Stockspot partnered with Women’s Agenda to survey Australian women about how they accumulate wealth and the perceived roadblocks that held them back from investing in the stock market.
The story that emerged was complex, yet not totally surprising. What is clear is that women in Australia are concerned about their financial futures, but the tools to go about creating financial freedom feel out of reach for many.
This is something that we at Stockspot hope to change for all Australians.
Top findings
A lack of money
The number one barrier to investing was (not surprisingly) a lack of money. Fifty-nine per cent of respondents ticked this as holding them back from investing.
However much has changed in the last five years when it comes to starting out investing and how much you need. Minimum investments and fees have come down as more companies like Stockspot use technology to offer personal invesment advice and diversified share portfolios.
Many of our clients dip their toe into investing with $2,000 and top-up their investments slowly as they become more comfortable with the process (and with us).
Let’s say you start with $2,000, and put a small amount into your investment portfolio regularly. Even $100 a week could get you from $2,000 to $265,000 in 20 years.
Fear of losing money
Understandably concerns over the fear of losing money and the risks involved were also high on the barrier list. Yes, investing may look like a rollercoaster with ups and downs along the way, much like most things in life really.
The trick is to keep an eye on the long term investing goal, the longer you stay invested the chance of losing money is greatly diminished. We actually recommend being a ‘lazy’ investor – that is, not buying and selling shares.
The stock market is often pitched by the media (and other people like stockbrokers) as something you need to watch every – single – day. Nothing can be farther from the truth. Simply starting early and holding your investments for a few years is the best way to create long-term wealth.
Trust issues
Not knowing who to trust, as well as a lack of trust (including in banks and financial advisers) was prohibitive. Sixty-six per cent said revelations from the recent royal commission into banking misconduct had affected their trust. Respondents were far more likely to trust their own online research above anyone else when they need financial advice.
It’s one of the reasons we put together this investing library online – to help people learn more about taking control of your financial freedom through investing.
Confidence and knowledge
A ‘lack of knowledge on how to invest’ (56%) and a ‘lack of confidence in ability to get started investing’ (48%) were key factors in holding women back from investing.
These days online investments advisers – like Stockspot – take all the guesswork out of investing as we do the hard work for you. There’s no need to obsessively watch the stock market or pick and choose specific shares.
We invest your hard-earned money in a well-diversified portfolio of stocks and bonds. We also re-balance it for you (ie buy and sell investments) when necessary.
Tax time is taken care of with an annual investment statement that includes all your investments in one summary. You can read about what makes an awesome investment portfolio or about when it’s a good time to start investing.
How to move beyond these barriers
These barriers, perceived or otherwise, are worrying, given women are already disadvantaged when accumulating wealth. The gender pay gap, motherhood, career breaks, caring responsibilities and long stints of part-time work are well documented as contributing to why women fall behind men when it comes to building wealth.
In no way do we believe that it’s women’s responsibility to make up for these inequalities. However a divide in those who do and don’t invest may be further contributing to a wealth and retirement savings gap between men and women. For women, investing could be a key to closing the wealth gap.
See for yourself how much wealth you can grow
What would that money be worth if left in a savings account instead?
$2,000 placed in savings account + $100 added every week for 20 years earning an average interest rate of 2 per cent per year. You would end up with $130,000. Not bad, but not great either when you consider that investing at 8 per cent per year would result in more than double that: $265,000.
Beyond barriers
We want more women to invest because we know how transformative it can be. Not only to your ability to live well in the future, but also to your confidence and independence.
A lot of the barriers to wealth accumulation identified in this report can be overcome. Especially when it comes to the lack of confidence some women feel about getting involved and how to get started.
We hope the findings in our report do offer some insight into what might hold women back from investing. Our hope is that this research adds to the conversation around women and money.
We believe online investing services like Stockspot offer a tried and tested way for all Australians to access a portfolio of investments that best suits their personal situation.
If you are ready to start investing, check out our 5 step Investing Checklist. If you’re not ready to start investing just yet, here’s our top tips on what to do before you start investing.
