When women were asked for words that best describe 'an investor', the second most common answer was 'confident' – according to 44% of people polled. These were the results from a survey of 7,500 savers and investors by Hargreaves Lansdown Financially Fearless report on How Women Invest last month.
MUM’S THE WORD
Women are also more likely to follow their mum’s financial advice than their dad’s as a quarter of women say that their parents have had the most influence on their attitude to money.
Sarah Coles, head of personal finance at Hargreaves Lansdown explains: "Mums are Britain’s financial heroes. They’re brilliant role models, and a font of financial wisdom for their daughters. It means we’re more likely to turn to mum for financial guidance than we are to ask dad."
I guess mums really do know best!
THE RISK FACTOR
Interestingly, when these women were asked a series of questions about investment, a large majority of women got the answers right. Even though 1 in 2 of them said they wouldn’t feel confident about making an investment, they know a lot more than they think!
- 97% knew investments could rise and fall in value
- 94% knew investment involves risk
- 91% knew that the greater the return you want, the more risk you usually have to accept.
- 82% knew what a fund was
Sarah said the finding highlights that "a major factor is the feeling we don’t know enough – rather than actually lacking the knowledge. Women tend to feel they need to be able to sit an A-Level in investment before they can get started, whereas typically men are more comfortable winging it."
SLOWLY BUT SURELY
It’s why taking the first small step by investing a modest amount of money and learning as you go along can be the most powerful approach. When women do invest, their instincts are good.
Sarah also noted that of the women who invest, "around a third do so through a regular investment plan, which is a brilliant way to build a lump sum, and helps take timing out of the equation entirely." She adds: “Sometimes you will buy when shares are rising, and sometimes you’ll buy when prices are lower and will benefit from subsequent rises."
INVESTING HABITS
Almost half of female investors hold their investments for at least five years. This offers the benefit of compound growth over time, meaning you have time to ride out the short-term ups and downs of the market, and it’s also more cost-effective and less time-consuming than chopping and changing.
The research also showed that women tend to invest in funds, spreading their risk from day one. Around a third use funds where a fund manager actively picks investments they think will do well, while almost a quarter use funds that track an index such as the FTSE 100 or the Dow Jones. And women who invest typically ask the experts. They are all checking expert reviews, seeking different opinions and financial advice.
WOMEN V. MEN
Hargreaves Lansdown's previous research showed that on average women’s investments tend to do better than men's. This is because the average for men is dragged down by those taking big risks and seeing their investments fall. But by taking a more moderate path, and spreading their risk, women are less likely to crash and burn.
Women are keenly aware of their role in helping to shape the financial lives of their children. Not only are they keen to pass on the wisdom they learnt from their mothers, but also to become better role models. More than half of women agree that they save and invest with their family in mind. Sarah added: "It’s not just that we want to put away enough to help support them as they get older, we want to show them what a strong female investment role model looks like too."
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