It’s International Women’s Day on 8 March 2021. And what better time than to highlight the financial inequalities faced by the fairer sex – and to offer some practical tips on how to overcome them?
Let’s start with the gender pay gap. Do you know it’s £7,280 per year? And a lack of progress made in closing that gap means that, at the current ‘pace’, there won’t be equal pay until the year 2277?!
Over a lifetime it can all add up and have a huge impact on the financial security of women – especially in retirement. The gender pensions gap for the average woman working full-time in the UK is £41,000, for example. If you include part-time work in the equation, this gap widens to £72,500.
And, with a longer life expectancy than men, the smaller pot of money has to last even longer - meaning women are 80% more likely to live in poverty after retirement than men.
While women may get paid less than men, the good news is that they still save more... at least as a percentage of their income. And women are good investors. A Barclays study last year of 2,800 Smart Investor customers, over a three-year period, showed that female investors achieved annual returns that were, on average, 1.8% higher than men.
Juliet Schooling Latter, research director at Chelsea, commented: “I think it’s even more important for women to save given that they may face a career break at some stage.
"Many women I speak to are unaware of how easy it is to invest and that investments can be made with quite small monthly sums. So my number one tip is to start saving as soon as you start earning. It’s so easy to put off but, if I could go back to visit myself in my early 20s, I would make sure that I put a little aside every month, instead of having that extra drink in the pub!
"And every time you get a pay rise increase the amount you invest before you get used to having the extra spending power. Don’t be afraid of the stock market and don’t be afraid to ask questions.”
This last sentiment is one echoed by Carol Stephens, a Chelsea investor. “I would rather ask and look ignorant once, than not ask and remain ignorant,” she told us. “My advice would be to just go for it – admit you don’t know, ask, get it explained and then invest.
Carol suddenly found herself having to learn very quickly about finances when she and her husband divorced 20 years ago.
“When I got divorced everything about finance was new to me,” Carol said. “My ex-husband had always looked after our finances and I’d never even had my own bank account or credit card, let alone an ISA investment.
“We had an amicable separation and when we sold our house, I bought two flats next door to each other plus the freehold. I moved into one and the other had a tenant. I now have four rental properties.”
With money to spare from the income she earned on her properties, Carol then began investing in an ISA. “I didn’t see the point in letting it sit in a bank account paying nothing in interest, so decided to be a bit bolder and invest it instead. My ex-husband had invested via Chelsea so I thought I would too,” she said.
“I’d read the financial pages and Viewpoint magazine and decided where to invest from there. I’m happy taking some risk – most of the funds in my portfolio have a Chelsea generic risk rating of 6-10. I only invest in funds that I understand though.”
“I’ve been drip feeding money into Fundsmith Equity for several years now - £50 a month. I like making regular payments and do it for a few funds including LF Lindsell Train UK Equity, Lindsell Train Global Equity, Stewart Investors Asia Pacific Leaders Sustainability and MI Chelverton UK Equity Growth.
“I don’t really pay much attention to market falls like we had last year. I don’t need to use the money yet, so there is no need to panic sell – I just let it sit there. I remember when I was married, we had Black Monday in the 1980s. My husband tried to sell some investments, but couldn’t as the market had closed. That turned out to be a good thing, as the market bounced back within months rather than years, so I learnt from that that you need to be more relaxed about it. Also don’t invest money that you can’t afford to lose.”
And if you are looking for ideas on where to invest your money, maybe consider an investment fund run by a woman?
On the Chelsea Selection, there’s VT Downing Unique Opportunities, a newly launched fund investing in UK equities, which is run by Rosemary Banyard, for example, as well as M&G Emerging Markets Bond fund run by Claudia Calich. And if you want there to be a world in 2277 when we finally get equal pay, maybe consider Ninety One Global Environment, whose manager Diedre Cooper is investing for a decarbonised planet.
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. Juliet's and Carol’s views are their own and do not constitute financial advice.