Bridging the Gender Investment Gap: Empowering Women in Finance for a Brighter Future
I don’t want to get into a gender debate, but you can’t ignore the statistics.
In 2023, there were notable differences in how men and women approached investing, both in terms of participation rates and investment styles.
Men tended to invest at a larger scale than women. In Europe, women invest 29% less than their male counterparts (survey by online bank N26 )
And racial demographics also play a part. 59% of black women did not own any investments, compared to 48% of Hispanic women, 34% of white women, and only 23% of white men. (CNBC and Momentive survey)
Having said that, the scales are moving towards more women investing and better than that, women investing are outperforming men by an average of 0.4% annually.
Is this discipline?
Is it purpose-driven investment strategies?
Women are generally more risk-averse, but this doesn't translate to lower returns; they achieve similar returns to men while taking significantly less investment risk. (Money Crashers survey and a Wells Fargo investor survey)
The starting point matters.
My personal starting point was into my 30s; after leaving home at 16, wealth creation was the last thing on my mind. Life survival was the critical point. However, now I look back and I was always working…but I didn’t know how to ensure that the work amounted to security and wealth creation.
Which is where life design comes in.
Do we understand the value of investing as a component of designing and sustaining our vision of our future?
And if we do understand the value of investing, why are we still not investing?
Social, cultural and systemic factors play a part
Life design, or the process of actively shaping one's life towards personal and professional fulfilment, can be more challenging for women than men due to a variety of social, cultural, and systemic factors.
Here are some key reasons that continue to impact independent life design and investing goals for women:
1. Gender Roles and Expectations
The needle has not shifted as much as we’d like, and traditional gender roles often dictate that women take on primary responsibilities for domestic chores and caregiving. This can limit their time and energy for personal and career development. Balancing family commitments with career ambitions or the desire to build wealth can be particularly challenging.
2. Workplace Challenges
Despite progress in gender equality, women still face significant challenges in the workplace, including gender pay gaps, slower career progression, and underrepresentation in leadership roles. These barriers can hinder women's professional growth and fulfilment and the ability to find funds to invest.
3. Societal Pressures
Women often face societal pressures to conform to certain standards of behaviour, appearance, and life choices. This can lead to additional stress and a feeling of having to meet unrealistic expectations. We aren’t encouraged or provided with education to save or invest effectively.
4. Networking and Mentorship Opportunities
Women may have fewer opportunities for networking and mentorship compared to men. This is partly due to a lack of representation in higher echelons of many industries. Strong networks and mentorship are crucial for career advancement, personal development, and investing and building a life of purpose.
5. Cultural Biases and Stereotypes
Cultural biases and stereotypes can limit women's choices and opportunities. For example, certain careers or life choices might be deemed more 'appropriate' for women, restricting their ability to pursue diverse paths and the ability to earn more.
6. Financial Inequality
Economic factors, including wage disparities and financial dependence, can also make life design more challenging for women. Financial constraints can limit access to education, training, and other resources needed for personal growth. The ability to find the right educational tools that help women eliminate fear of risk is not easily accessible.
7. Work-Life Balance
Achieving a work-life balance can be more difficult for women, especially those with children. The expectation to manage both a career and a household can lead to burnout and stress.
8. Safety and Mobility
In many regions, concerns about personal safety and societal norms regarding women's mobility can restrict their access to education, employment, and social opportunities. It is difficult to imagine designing a life when this continues to be a concern for women overall.
9. Health and Wellness
Women's health needs, including reproductive health, can impact their life design. Access to healthcare and societal attitudes towards women's health can influence their life choices and limit their ability to move forward in the desired direction.
10. Global Diversity in Challenges
It’s important to note that the challenges faced by women in life design vary widely across different cultures, economic classes, and individual circumstances. The intersection of gender with other aspects of identity (like race, class, and sexual orientation) can compound these challenges.
In addressing these challenges, it's crucial to recognize the role of supportive communities, policies promoting gender equality, and individual resilience.
64% of women would like to be more active in their finances and would be more likely to invest or increase their investments if they had clear steps to do so. (Fidelity study)
Only 8% of women vs. 21% of men scored 80% or more on an investment knowledge quiz. (FINRA Investor Education Foundation and George Washington University)
The need for more inclusive financial education and investment opportunities tailored to women's needs and concerns will help bridge the investment gap and foster a more equitable financial landscape. i.e. if we provide clear steps on how to invest and education about investing, then we can change the trajectory of our life design.
Empowering women through education, mentorship, and systemic change can also help mitigate these challenges and open up more opportunities for women to design fulfilling lives.
Resources:
Important Disclaimer: This content is for entertainment and educational purposes only. Nothing in the content materials shall be considered legal, financial, or actuarial advice. Raj Hayer is not liable or responsible for any actions, inaction, or direct or indirect result of your choices and actions.
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