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It’s International Women’s Day! Before I start, yes there is an International Men’s Day – and no, I probably won’t write about it when it rolls around, but guess what? This is Bronni.co.uk not YourIrrelevantAndIncorrectManOpinions.com so, yeah! Gender inequality is a bad deal for all of us, and the pressure for men to “bring home the bacon” can be equally as damaging as people thinking women earn less on average because they “choose” careers that aren’t as well paid. When really, as a society, we undervalue jobs that sound like “women’s work” because deep down we consider professions like care, teaching or nursing to be something women should be doing for free anyway – because of our biology or some claptrap.
ANYWAY, shall we move on?
There are so many aspects of personal finance where women are disproportionately drawing the short straw. While a considerable amount of these would need big societal shifts to ever change, in my opinion; today I’m going to try and talk about something I think we can tip the balance on, as women ourselves, and put our money where our mouths are.
The savings gap
You’ve probably heard of ISAs. They’re a government savings wrapper where you won’t be taxed on the interest you earn on the money you put in.
There are three types:
These are very much like normal savings accounts. Your bank will offer you an advertised rate, for example, 1.15%, and that’s what you’ll receive until the promotional period is over.
Stocks & Shares ISA
Does what it says on the tin, you transfer in money, and you use it to purchase stocks and shares. The amount you put in is not guaranteed to go up, or even stay the same, your money is at risk. However, the returns you can get often easily beat any savings rate available. You can also keep your money in there long term and feel the magical effects of compound interest. There’s no introductory rates to lure you in, to then drop to close to zero a year later.
You can take out a cash or a stocks and shares LISA, it’s up to you. I used my cash LISA from Skipton to help me get £10,000 of my house deposit for free*.
*Well, it wasn’t like *free* free, but, free enough.
You’re allowed to open or add to one of each type per tax year. You can save a maximum of £20k across all of your ISAs annually too, if that’s something you can afford!
What’s the issue?
The problem is that although women are good savers, and a lot of us are being sensible and paying into an ISA, we’re actually being too sensible. Women are much less likely to open a stocks and shares ISA than men.
Why that’s a bad thing is that stocks and shares ISAs outperform cash ISAs two thirds of the time. The average return on a cash ISA in 17/18 was a piddly 0.97%, but for stocks and shares ISAs people were raking in 4.8% on average. Do you like those odds? I don’t!
So, opening a stocks and shares ISA is feminist?
Yeah, that’s what I’m saying, basically. We have the money, we’re putting it in ISAs, but at the last hurdle we’re all choosing the safe option. We’re essentially letting our lack of confidence and trust in our own convictions take money out of our pockets. This needs to stop.
Why are we doing this to ourselves?
I can see so many reasons why women choose a guaranteed less than one percent interest rather than risk losing money on the stock market. We aren’t being stupid, we’re probably overthinking things to our own detriment. Outside of my pension (which I only opened about a year ago) I’ve never invested in anything either.
Here are the reasons holding me back from becoming an investor, and what I’d tell myself if I heard this drivel come out of my mouth.
I have no idea what I’m doing, what even is a stock? A fund?
The information is out there, for free, you just need to be open to learning something new. You’re not braindead, you actually make your living as a financial journalist, FFS. Do you seriously believe you’re incapable of understanding something that 8.62 million Brits are doing? You understand how Eurovision is scored!
It was hard enough to get that money in the first place, I don’t want to see it disappear.
Fair point, we all remember 2009, don’t we? But it’s actually incredibly unlikely you’re going to lose money investing, in the long term. You’re intelligent enough to choose the sort of investments that will suit your own appetite for risk.
Also, because of inflation, you’re actually losing money keeping all of your savings in accounts paying less than 3%. Didn’t think about that one, did you?
What if my house falls down and I need to access the money NOW.
Let’s be real, how often have you ACTUALLY taken money out of your savings. Your house deposit. That’s pretty much it. Also you have insurance, stop being facetious. You can keep a BIT of money in an easy access savings account as an emergency fund. Sorted.
Investing isn’t for me. I never see women (especially women in their 20s) talking about the stock market.
Be the change you want to see in the world. Stop being a hypocrite and practise what you preach. How have you even written this blog post without actually having a stocks and shares ISA? You’re having a laugh!
I should just overpay my mortgage, it’s safer.
Alright, let’s get into this. What’s your mortgage rate? 1.95%? Did you not read the bit up there where the average return on a s&s ISA was 4.8%? You got an A in GCSE maths Bron, the numbers just aint adding up.
Also, it’s not really safer. Imagine if you lost your job and couldn’t pay your mortgage. If you’d been overpaying your mortgage, there’s nowhere to get that money from, BUT you could sell your investments!
Have I convinced you? I’ve almost convinced myself.
Just a note, I’m not a financial adviser – a stocks and shares ISA may not be a good idea for you, it will depend on your personal circumstances. If you have a short term goal (as in, something you’re using your savings for in the next five years) then a cash LISA/ISA could be a safer bet. If you’re not sure you should ask someone who knows what they’re talking about, as always.
This post was written to contribute to the UK Money Bloggers International Women’s Day campaign.
Some other posts from members included:
High Earning Women: 10 steps to increase your income without working more by The Money Principle
International Women’s Day – Financial Empowerment for Women by Mrs Mummypenny
My thoughts on International Women’s Day by The Moneysaving Mum1