Develop an appetite
Cast your minds back to March 2020. Days before the UK went into lockdown, the rapid spread of the coronavirus caused world stock markets to plunge. News At Ten bulletins showed images of stock exchange screens flashing red, graphs with plunging lines and traders holding their heads in their hands.
Images like this are hard to forget, and reinforce the view that the stock market is a risky place to put your money. But what has happened since then? By early autumn 2021, the UK stock market (FTSE All Share Index) had bounced back by 45% from its pandemic low point. In America, the main stock market index (S&P 500) has fared even better, rising 96%, boosted by large US tech companies such as Amazon, Netflix, Apple and Google, which have made big profits as more of our lives move online.
A rate of 1% interest on a high street savings account is miniscule – yet there have been few News At Ten bulletins about these less-than-roaring returns!
‘Holding on to cash is a classic female mistake,’ says Charlotte Ransom, founder of Netwealth, an online investment platform. Her business has plenty of female clients who have turned to investing in later life, often after they have received an inheritance or a divorce settlement. ‘As well as feeling insecure about taking a risk, women often don’t appreciate the value of investing – and the terrible risk of not investing,’ adds Charlotte.
Say, for example, that you invest £250 per month. After 25 years, assuming moderate average investment growth of 5% per year, you could have amassed nearly £150,000. But if you had left the money in cash, based on today’s low interest rates, you’d have little more than £75,000.
Feeling that we don’t know enough is another major factor holding women back, but this often boils down to confidence rather than competence.
‘If you ask women and men about their level of knowledge surrounding investments, women are less confident about it,’ says Sarah Coles, personal finance analyst at Hargreaves Lansdown. ‘However, when you ask specific questions about the nature of investment, the difference between the sexes is far smaller – men only know marginally more about investing, but feel much more confident about it.’