Millennial women have far more financial independence than previous generations ever did. It’s a little known fact that we’re in the midst of a global $22 trillion shift of wealth to women, which should be complete by 2020 when 9 out of 10 women are anticipated to be the sole financial decision maker in their household during their lifetime.
Yet, while research shows that millennial women are better at budgeting and paying bills on time than men, this confidence does not extend to investing and saving for retirement. With only 53 per cent of millennial women saving for retirement compared with 71 per cent of millennial men, this is a ticking time bomb for female savers.
Many millennial women do not invest due to a lack of knowledge around how to get started. A 2018 survey by Wealthsimple found that 26 per cent of women weren’t investing because they didn’t know where to start or how to choose the right company to invest with. Additionally, almost half of the women surveyed didn’t believe that they had enough money to start investing.
It also doesn’t help that, on average, men speak more openly about money with their friends: everything from discussing salaries, bonuses, wage negotiations or investment tips. Women are much more likely to avoid the topic, with only 26 per cent of millennial women thinking of themselves as having a high level of financial engagement, compared with 55 per cent of men.
Marking International Women’s Day, I want to share my top tips to encourage women to get investing:
1. Don’t let language be a barrier
The investment industry is notorious for using complicated and jargon-y words that rarely resonate with anyone who doesn’t have a double degree in finance. The new generation of digital investment providers have started to tackle this issue but there is still much work to be done. If you’re starting out for the first time and need an extra helping hand, check out financial website Boring Money who help breakdown investing terms or Money to the Masses for knowledge of providers or account types.
2. Keep costs low
In the UK, the average investor pays 2.6 per cent in fees for investment advice and management. This may not seem like a huge amount in the short term, but over time these fees could be eating tens of thousands into your hard-earned savings. Do your research and make sure you are choosing a provider that displays all the fees upfront. A good rule of thumb is you should never be paying more than 1 per cent of what you are investing in a fee.
3. Set it and forget it
This rule applies to all of your finances. The most successful way to remove your emotions from your money is to automate it. A direct debit from your pay cheque into a saving or investing account is a great way to trick yourself into saving more money, and when it comes to investing will mean you are less likely to react out of fear (or elation!) when faced with market volatility.
4. Invest in your values
Research has shown that women are more likely to invest in line with their values, goals and priorities. Set aside time to think about what you are working towards (starting your own business, buying a home, saving for retirement) and at what stage of your life you are hoping to achieve this goal. For people who want to make sure their money is aligned with their values, a socially responsible investing option allows you to invest in companies that are prioritising initiatives like green technology or ensuring fair labour practises.
For your guide to all of the best sustainable, responsible and green investment funds on the market, check out the latest edition of Good With Money Good Investment Review
5. Meet with a financial adviser
As daunting as it might be to discuss your financial situation with a complete stranger, speaking to an expert can be a great way to conquer your fears around investing. An adviser can help you set goals and build an investment plan that is tailored towards meeting your long term plans. At Wealthsimple, we offer all our clients access to a qualified investment adviser whether they have £1 or £1M invested with us through an easy phone call.
People don’t talk about money, and that has real consequences in life. Wealthsimple’s investment survey revealed that 33 per cent of women would rather reveal their weight than share their bank statements with colleagues or friends. This is a staggering figure: it is hard to believe so little women want to talk about their finances. Millennial women should be encouraged to talk openly and honestly about money to hinder fears in the future. By changing your outlook on money, you can change your actions towards it.
Michelle Keller-Hobson is Head of Client Success at online investment service provider Wealthsimple UK