I saw a statistic on a group I’m in the other day – Maria, Author of the brilliant blog, The Money Principle said, “did you know that there are over 1500 personal finance blogs on the rockstarfinance.com directory. There are twice as many frugality blogs created by women that [sic] ones created by men. Also, there are 102 investing blogs by men, and only 11 by women. Interesting?”
For me, this reflects how women have generally been shying away from investing, and how we’re being let down by a financial industry that isn’t set up for us so we can learn.
This seriously needs to change! With all the great leaps forwards that women are taking, investing is sadly not one of them….yet.
Women need to start investing as a matter of urgency, and today I’m going to tell you why.
Who Am I?
My name is Dr Nikki Ramskill and I run a blog called The Female Money Doctor. I’m a UK-based medical doctor, with a passion about teaching people to “heal” their finances in order to reduce stress and improve overall well-being. How we “do” money affects everything in our lives. From the food we eat, to the housing we live in. Do it well, and you’re sorted for life. Do it poorly, and you learn the hard way. I certainly have.
Women and Money
Women are fabulous at looking after everyone – kids, parents, spouses. But when it comes to ourselves, there seems to be a block. Yes we all know about saving and being careful with how we spend (the thousands of money blogs out there proves this popularity), and of course, there is nothing wrong with that! We ALL need to save money.
But at the end of the day, there’s only so much “frugaling” you can do. Being frugal helps, but its only one side of the equation.
Eventually we need to either radically change our lifestyles to reduce our outgoings (as in, move area, downsize our house kind-of-lifestyle-shift), or we need to bring in more money.
For many women, this is tricky. Childcare falls to us most of the time – the gender pay gap provides evidence for this. Women are therefore putting less away for retirement, simply because they are not working as much as men do. I know this is a broad generalisation, but the overall trend is that women take more time out of work, and therefore pay less into their future fund for retirement. Couple this with women outliving men in old age, and we have a problem.
One solution to this is to get more women into investing. This does not require working a second job or long hours. It doesn’t require advanced degrees in finance or a deep understanding of the stock market. You don’t even really need to be that good at maths!!
Anyone could start from £25 per month, and companies are now even finding a way to allow you to invest from £1 or use your “pennies” to invest.
With opportunities like this, how can you not now get involved!
Let me explain to you the 3 main reasons why I think women in particular must start investing as soon as possible. I promise it isn’t scary, and actually, women make very good investors!
Inflation eats your savings
Let me be clear. Investing is very different to just saving money.
This is money that is specifically put aside for the purposes of putting into property, or the stock market or other asset classes like bonds or gold so that it appreciates in value. When money is left in a savings account, the interest rate you get for doing so is usually pretty poor. If you have a 2% savings account, £1,000 will earn you just £20 in a year. You may think that this is a safe bet – a guaranteed £20 for leaving the money in there, and yes, you’d be right, but with overall inflation hovering around 3% per year, eventually your money will buy you a lot less.
To make my point, how much would £1,000 have bought you in 1918?
According to DesignLab based on inflation figures for the past 100 years, in order to have the same buying power of £1,000 in 1918, you’d actually need £52,552 today.
In 1968, £1,000 is worth £16,039 in today’s money. In 50 years time, how much buying power will your money have?
We cannot afford to sit back and assume that having money in a savings account is best for our money anymore, because as the cost of living goes up, the value of your cash goes down. By being passive on this, the bank is winning because they don’t have to pay you very much at all for letting them borrow your money, while they, in turn, invest it to make a profit. All at your expense.
Pensions aren’t what they used to be
Our pensions are dwindling in value because the government and our companies cannot afford them. As the population ages, and retirement is stretching out for 30-40 years, pension pots are needing to go much further. Couple that with maternity leave, reduced contributions, and lack of alternative provisions, and this makes for a depressing future, especially for women.
You cannot assume that your company will make sure you’re provided for. It’s ultimately down to you.
The government has recently brought in workplace pensions that we are automatically enrolled into, but it is being gradually phased in. Meaning, you may only be contributing a small percentage of your wages each month.
Do you even know how much you’re contributing?
Do you know how much your work contributes?
How do you know it’s going to be “enough”?
The money that you are contributing every month has a direct effect on how much you will have in retirement. Estimates from financial planners have suggested that we should be putting away 15-20% of our income in order to ensure that we have enough to live on in retirement. If you’re younger, then you can get away with putting in less, but if you’re older, then even this may not be enough.
Could you afford to do this?
The state pension is not a good back up plan. The government may move the goalposts at any time, as what happened with the WASPI women. Many of these ladies are out of work and have serious financial difficulties due to lack of pension provision through no fault of their own. As a woman of the so-called “millennial generation”, I cannot afford to ignore this. I have time to correct my financial mistakes, and learn from what has happened.
Will you do the same?
Our children are getting “needier”
I’ve already said that Inflation is making life more expensive. Housing, food, bills all cost more than they used to. This is putting more stress on younger generations who cannot afford to get into the housing market for example due to the need for large deposits. This means either relying on the bank of mum and dad, or waiting it out for years to save money to buy a property.
As younger generations age, the bank of mum and dad will become less reliable because saving money is becoming more challenging. If you learned how to invest in stocks and shares however, you could set your children up with ISAs that will eventually be their house deposits.
The money you need to put away per month isn’t huge either. With potentially 18-20 years of saving (assuming your child is a baby or a toddler now), you will easily have a deposit saved (or uni fees are covered, depending on your priorities).
Learning how to invest benefits you for retirement, but it also benefits your kids. Teaching them these essential life skills cannot be underestimated. Our school teachers cannot be expected to teach this to them, it has to come from home.
So these are some of my reasons for why women have to get on and learn to do this. We cannot rely on others to do it for us – banks and financial experts do not have our best interests at heart no matter how much they tell you otherwise. They are businesses at the end of the day, and papa-bear has to eat (or take a cruise around the med). Don’t even get me started on how women defer financial decisions to their partners. Trust me, I have been there, and it is not pretty.
I want to do my bit to change all this. I’ve set up a course to teach people how to invest for themselves in the stock market, mainly from a female, non-banker, UK-based perspective. I have explained jargon, and I have broken down the steps to setting up a basic stock portfolio. It isn’t hard. If I can do it, you most certainly can.
As a thank you for getting to the end of my (ranty!) post, I am giving readers of The Money Shed 20% off of my course. Just use code KSC1 at the checkout and it’ll automatically deduct it for you. In addition, I’ll pick one winner on the 2nd April at 8pm from the group to have their course cost refunded so they get the course FOR FREE!
Now you have no excuses!
Have fun, and I wish you all the very best in your investing journey.
Dr Nikki x