Four in five women shun investments due to lack of understanding
An insight into the nation’s savings habits reveals men and women have different attitudes to investing versus holding money in cash.
The study of 2,000 adults conducted by Selftrade from Equiniti reveals that just one in five (19%) women hold investments, compared to a third (34%) of men.
One in three (33%) women claim a lack of knowledge in the stock market holds them back.
Women are potentially losing out by holding their money in savings accounts (52%) and shockingly, 17% of women say they keep their money in a piggy bank, compared to 13% of men.
Women are however savvy to the pitfalls of cash, with a quarter admitting it is the worst way to save (24% vs 20% of men), but they are far more likely to be risk averse.
However, women who do invest are just as bold, if not bolder than men in the amount they deposit. Women who hold stocks and shares have, on average, more money invested than men at £26,000 vs £25,251.
“Doing a small amount of research is often enough”
Mark Taylor, chief executive of Selftrade from Equiniti, says: “Investing in individual stocks is difficult and time consuming for anyone, therefore mutual funds and exchange traded funds (ETFs) are a good options to spread risk and to gain access to a variety of markets quickly and easily. Doing a small amount of research and being mindful of significant political and economic events is often enough to make an informed decision on a fund or ETF.
“Investing regularly and for the long term is also a great way to lower exposure to risk. Having a monthly direct debit into a stocks and shares Isa, with as little as £50 being deposited at a time, is a great way for people to test the waters. If you are really unsure, speaking to a financial adviser is always advisable.”
|Current account with a bank or building society||60%||55%|
|Savings account with a bank or building society||53%||52%|
|Piggy bank/rainy day jar||13%||17%|
|Cash individual savings account (Isa)||37%||34%|
|Stocks and shares (not part of an Isa or self-invested personal pension)||17%||8%|
|A unit trust/mutual fund (not as part of an Isa)||4%||2%|
|Stocks and shares Isa||11%||6%|
|Savings bond (with a bank, building society, NS&I or life assurance company)||10%||8%|
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
A collective investment vehicle (known in the US as a “mutual” or “pooled” fund) and similar to an Oeic and investment trust in that it manages financial securities on behalf of small investors who, by investing, pool their resources giving combined benefits of diversification and economies of scale. Investors buy “units” in the fund that have a proportional exposure to all the assets in the fund, and are bought and sold from the fund manager. The price of units is determined by the value of the assets in the fund and will rise or fall in line with the value of those assets. Like Oeics (but unlike investment trusts) unit trusts and are “open ended” funds, meaning that the size of each fund can vary according to supply and demand of the units form investors. Unit trusts have two prices; the higher “offer” price you pay to invest and the “bid” price, which is the lower price you receive when you sell. The difference between the two prices is commonly known as the bid/offer spread.
Like a self-select ISA but for pensions, self-invested personal pension is a registered pension plan that gives you a flexible and tax-efficient method of preparing for your retirement. It gives you all sorts of options on how you put money in, how you invest it and how it’s paid out and offers a greater number of investment opportunities than if the fund was managed by a pension company. SIPPs are very flexible and allow investments such as quoted and unquoted shares, investment funds, cash deposits, commercial property and intangible property (i.e. copyrights, royalties, patents or carbon offsets). Not permitted are loans to members or people or companies connected to the SIPP holder, tangible moveable property (with the exception of tradable gold) and residential property.
An Exchange traded fund is a security that tracks an index or commodity but is traded in the same way as a share on an exchange. ETFs allow investors the convenience of purchasing a broad basket of securities in a single transaction, essentially offering the convenience of a stock with the diversification offered by a pooled fund, such as a unit trust. Investors buying an ETF are basically investing in the performance of an underlying bundle of securities, usually those representing a particular index or sector. They have no front or back-end fees but, because they trade as shares, each ETF purchase will be charged a brokerage commission.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Generally thought of as being interchangeable with insurance but isn’t. Assurance is cover for events that WILL happen but at an unspecified point in the future (such as retirement and death) and insurance covers events that MAY happen (such as fire, theft and accidents). Therefore you buy life assurance (you will die, but don’t know when) and car insurance (you may have an accident). Assurance policies are for a fixed term, with a fixed payout, and unlike life insurance have an investment aspect: as a life assurance policy increases in value, the bonuses attached to it build up. If you die during the fixed term, the policy pays out the sum assured. However, if you survive to the end of the policy, you then get the annual bonuses plus a terminal bonus.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.