Fewer women invest than men. But, given that they live longer, their need for a healthy pot of retirement savings is greater. Women also earn less over their lifetime.
The combination of having less disposable income to save, failing to put their money to work in assets that can beat cash savings and living longer is a toxic one that puts women’s finances at risk as they grow older.
Of these three factors, only the failure to invest can be easily addressed. But figures from HM Revenue and Customs on the number of people with tax-free Isas highlight the investment gap between the sexes.
There are more than a million stocks and shares Isas held by men, compared with 870,000 held by women, and male Isa investors outnumber women in all age groups. However, more women than men have opened a cash Isa, which indicates the problem is specific to investing, rather than saving generally.
Research from Fidelity, the investment firm, aimed to find out why women did not invest. It questioned both men and women with cash savings but no investments.
More than a third of the women who took part in the study said they did not feel confident investing, compared with 26pc of men. More women also said they didn’t have sufficient knowledge to invest and that they did not understand the stock market.
It’s an issue that many financial firms say they are attempting to tackle by encouraging more women to invest. However, none seems to have hit on the right formula.
‘I want the investments to be easy for Jennie to manage when I’m gone’
John and Jennie Byrne, both 73, epitomise the gap between the sexes. Both retired, they have cash savings and investments, but Mr Byrne manages all their non-cash assets.
Mr Byrne says that when he became interested in investing at around the age of 50 he taught himself how to navigate the stock market. He had a number of shares in his former employer, Unilever, and received a lump sum from his pension when he took early retirement at 56 owing to ill health.
The couple, who have been married for 50 years, jointly made the decision to use some of the money to buy a second home in Cumbria for around £300,000.
“We were then left with a chunk of that cash plus some Unilever share options. That’s the point where Jennie really wasn’t interested,” says Mr Byrne. Initially he invested in a low-cost “tracker” fund that simply mirrored the performance of the FTSE 100 index, but after building up his confidence he put money in funds run by professional managers, which have delivered better returns.
“I read the financial pages, which is not something Jennie would spend time and energy on,” he says.
Mr Byrne now uses online platform Bestinvest and invests for other female members of his family, including his daughters, his sister-in-law and his son-in-law’s mother. In total he looks after about £1m worth of investments. His sons manage their own finances.
“It’s a bit like learning to cook: I didn’t need to do it when I was growing up but I suddenly realised you didn’t have to be a brain surgeon to do investing,” he says. “I can understand it and understand how much risk to take. I moved from shares to shares and property to a portfolio that includes hedge funds, property funds and a small amount in commodities,” he says.
Increasingly, he says, he is conscious of the need to make the investments easy for Jennie to manage after his death, although he says she would probably use an adviser to help her, rather than take on the task herself.
‘We take joint control of our money’
Dot and David Merriott, by contrast, take a joint approach to their investments. They married 14 years ago and each has children from previous marriages. Both have kept some money separate to pass on to their respective families when they die, but they also have joint investments to fund their passion for travelling in their retirement.
Mrs Merriott, 67, says they sit down together at the end of the tax year for a review of their finances and to discuss any changes they should make to their investment portfolios.
Her husband, who is three years older, says when he started to invest 15 years ago he chose individual stocks, but realised that “getting 75pc of your stock picking right could be quite seriously wiped out if you got one pick wrong”. He now invests entirely via funds to spread his risk, using online platform Chelsea Financial Services.
He says this shift was spurred by his wife’s advice. “I was moving that way anyway and Dot is a competent follower of the markets and the world economy, so ever since meeting her I have talked to her about investment.
Recently, he says, they have both become worried about the world economy, with concerns about Brexit, Donald Trump’s election, the potential collapse of the EU and stock market valuations.
“Having sat up in bed early one morning and discussed it, we agreed that we should be taking less risk, which included holding more money in cash,” says Mr Merriott.
However, both say they will never force the other to invest in anything “I would never say to Dot, ‘You’ve got to be in that’ – it’s a hostage to fortune.”
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‘The language and visual aspects of finance are male’
“Historically, investments and finance were professions for men; women were seen as engaging with money just for household and day-to-day stuff,” says Dimitrios Tsivrikos, a psychologist at University College London. “Sadly, in the 21st century that stereotype is still ingrained.”
He says until women are better represented in industries such as finance, those stereotypes are unlikely to change. But what can we do before that shift takes place?
“Generally, the more contact we have with something, the less we are afraid of it,” he says. “The more women are in contact with finance, even with things such as mortgages, or with shares and investing, the more they will feel empowered to actually make those decisions.”
Many companies in the financial sector are also guilty of perpetuating a male focus, Mr Tsivrikos adds. “The language and visual aspects of investing are still very male-dominated – even things such as bank notes, which have more images of men on them. The more we have female figures on money and as visual components in the world of finance, the more they will be engaged.
“At the moment there is a lot of celebrating feminism and talking about women’s rights in a broad way. This is problematic: we need to move away from broad-brush statements on equality and address the key issues that we want to fix.”