The Daily Telegraph - Saturday - Money
Why don’t women invest in shares?
The stock market is for boys, women say, as they forgo tax perks and choose other forms of saving. Richard Dyson reports
You might overhear men in the pub talking about shares or markets, but not women. This gender split is not merely anecdotal – it’s borne out by hard fact.
Britain’s biggest stockbroker, Hargreaves Lansdown, says just 37pc of its 800,000 clients are women. And contrary to what some might expect, younger women are even less likely to buy shares: of Hargreaves’ customers aged under 35, only 30pc are women.
Another broker, Selftrade, has found that one in 10 women has a stocks-and-shares Isa, compared with almost one in five men.
When it comes to cash deposits, however, the sexes are on a par.
It’s not as though women don’t make outstanding investors. Fund management is one aspect of finance where women regularly take the very top jobs. Women such as Nicola Horlick, famous for waging highprofile corporate battles, or Helena Morrissey, who oversaw fund manager Newton for 15 years and chairs the trade body for Britain’s £6 trillion fund industry, are household names.
And there are countless other women managing our Isa and pension money.
But with all forms of savings low and falling, and the Government under pressure to reduce state pension benefits for future retirees, banks and other investment firms are now trying to persuade more women to become long-term share investors.
Barclays last year unveiled a new, low-cost investment service that will be carefully marketed to current account customers. Attracting women is a key objective.
And Ms Morrissey will in May join Legal & General, the giant insurer that is increasingly focusing its efforts on property and investing, with part of her aim being to “bring more women into investing”.
Some suggest that women are deterred from regular stock market investing – say into an Isa or pension – because they are more likely to have career breaks and envisage needing access to the cash. Others say women are simply more risk-averse than men and less comfortable with the thought of a potential capital loss – even if it is only on paper.
Antonia Price and her two friends are all investing for the long term: their chosen vehicle is property. Long-standing friends from school, all aged 44, they are also all divorced with children and full-time jobs. “Two years ago we had one of our get-togethers and we were talking about pensions,” said Ms Price. “And we decided that we needed to get ourselves sorted out. That meant self-provision in retirement.”
Ms Price, who works as a consultant helping internationally mobile executives, lives in Kent, while her friends live near Bristol. Together they have created a company with the aim of buying 10 small properties, all within the Bristol area. The first property, a one-bedroom conversion, was bought in February last year for £130,000 and was let almost immediately for £695 a month – making a yield of almost 7pc. They borrowed about £100,000 of the purchase price.
Their offer on a second property, at £136,000, has just been accepted.
Buy-to-let in this way, even through a company arrangement where they each own equal shares, is less tax-efficient than traditional stocks-and-shares investments inside a pension or Isa.
Pension investing attracts tax relief that boosts contributions by up to 45pc, although the eventual payouts from the pension are usually taxable. Pension assets can be bequeathed free of inheritance tax.
Contributions to an Isa don’t attract relief but there is no tax due on income or gains taken from the Isa in future years.
Buy-to-let investments, by contrast, are likely to attract income, capital gains and inheritance taxes. Transactions are also expensive in terms of agents’ fees, stamp duty and other costs. Recent tightening of tax rules has indicated that governments are disinclined to encourage this form of investment.
The three women raised the original money by extending the mortgages on their homes, so there is a further cost to factor in.
Did they consider investing in shares instead?
“For us it’s about income,” Ms Price said. “I have a pension, but it’s not brilliant. We want long-term income and security in our 60s and 70s and for us that’s property. I’ve never really considered stocks and
shares. It feels like a boys’ club. The ownership of something physical appeals.”
Jane Wallace, co-founder and editor of family finance website Skintedmintedmum, said traditional investment providers – insurers, stockbrokers or fund firms – had failed to reach people who have little confidence or knowledge of the stock market, even if they are eager to save. This group includes millions of women, she said.
“Financial services are mired in gobbledegook which is tedious to pick through as a novice, especially if you never learned economics at school or home,” Ms Wallace said.
The press doesn’t help by sensationalising market downturns, she added. “Investing itself can easily be perceived as high risk: the media tends to report on stock markets when they are either in a ‘ boom’ or a ‘ bust’ phase. The idea that dividends can mount over time into a nice nest egg is not headline news.
“By contrast, cash and property are far more tangible and comprehensible – you can even live in a property yourself should everything go wrong.”
Clare Francis, savings and investments director at Barclays, pointed to “a lot of research that shows women’s attitudes to money and investing are quite different to men’s”.
“Women are often more risk averse, focusing on financial security, while many men are willing to take more of a gamble in the hope of better returns in the long run. Investing in the stock market is something many women perceive as too risky.” A lack of women working in financial markets also plays a part, she said.
“There are psychological associations linking the stock market with men. While the number of senior women working in the City is increasing, the investment industry is still predominantly male-focused.
“Investing in the stock market carries risk, but the property market is exactly the same. And the barriers to entry of investing in property are higher because you need to put down a sizeable deposit, whereas you can get exposure to the stock market with much smaller amounts – less than £100.”