This article is from the Good Guide to Financial Wellbeing for Women, available to download for free here
Recent years have shown us just how vital it is to have a ‘rainy day’ savings fund that you can call on at a moment’s notice. Traditional advice goes that, if possible, you should have three to six months’ salary stashed away in an easy-access account. You can check out our top-paying sustainable savings accounts for the best options for your pocket and the planet, too.
But women also need to INVEST way more than they do; whether that’s adding more to a workplace or personal pension, or investing in a Lifetime ISA or a Stocks and Shares ISA.
Yes, saving is less risky because your money is protected and you can get to it quickly. But it also has far less potential for meaningful returns. This is particularly true in the current high inflation environment, as cash savings will lose value in ‘real’ terms over time (i.e you’ll be able to buy less with your money in the future than you can now).
Investing: in it for the long haul
According to Schroders, saving money into a Stocks and Shares ISA over the nine years to 2019 would have returned a massive two-thirds more than a Cash ISA. Although, do bear in mind that making a profit with your investments is never guaranteed and their value can go down as well as up. This has been illustrated in the last two or three years when stock market values have dropped.
Sustained periods of volatility like this are unusual, but when you invest it should always be for the long term (think five years or more). The overall trend is usually upwards and your investments are likely to ride out any falls over time.
This guide provides general information only. It is not financial advice. If you invest in any of the products mentioned in this guide, you do so at your own risk. Your capital is at risk, losses from investments are not covered by the Financial Services Compensation Scheme and past performance is not a guide to future performance. Tax treatment is dependent on individual circumstances and is subject to change.
Women paying a heavy price for sticking with cash
There’s an old adage in the financial world that ‘women save and men invest’ – and it unfortunately still rings true. The latest HMRC figures reveal that in the tax year 2019/20, 1.57 million men took out a Stocks and Shares ISA, compared with 1.16 million women.
Meanwhile, around 5.03 million women opened a Cash ISA, compared with 4.12 million men. Given that over the long term, stocks and shares almost always outperform cash, women are paying a heavy price for sticking with cash savings.
On average, men now have an average ISA holding of £23,825 and women an average of £21,834 – This is a gender ISA gap of nearly £2,000. Although still significant, signs are encouraging as in the previous tax year, the gap was almost £3,000.
Investing really can have a life-changing effect on our savings and – when done in positive impact funds and projects – can also help to protect our planet for our children and theirs after that.
Download the Good Guide to Financial Wellbeing for Women and get investing TODAY!