Women face hurdles in quest for financial security

Education on investing is needed to bring Irish women to the table —as investing has long been confined to those with the capital and knowledge to do so. But that is changing, says ANGELIKA DEHMEL, Content Lead at BUX
Women face hurdles in quest for financial security

It’s all about educating people on their financial options. Picture: Stock

ON average, women earn 14% less than men in Ireland. This starts at an early age, with CSO data showing men make more than their female colleagues in every age bracket from their teen years onwards.

Sadly this isn’t a uniquely Irish problem either, but a global phenomenon, with the World Economic Forum’s most recent report on gender gaps highlighting how a lack of women in managerial roles, coupled with a disparity in labour force numbers, is driving the gender pay gap.

In line with these findings, data from 2019 on the female workforce participation rate in Ireland showed that while gender roles are changing, women often find it challenging to make up for lost time after going on maternity leave or taking time off.

What’s more, despite being paid less, women tend to live longer, meaning they have to stretch their money, making it perform better throughout their lives.

The fact that women engage with money management at fairly low levels is not surprising when you consider that communications around investment have been shown to be gendered strongly in favour of men.

A linguistic study by Starling Bank found 65% of women’s magazines defined women as “excessive spenders” who need to control their urges to “splurge”. Is it any wonder that women have been slow to invest in an industry where even the language is pitted against them?

Thankfully, even if the language is not changing, the number of female investors is. In fact, research by neo broker BUX indicates that female investors apply a long-term investment strategy, with 17% of women investing in Exchange Traded Funds (ETFs).

Further, two of the top 10 most popular ETFs among women are focused on dividends, indicating a long-term approach.

As we strive for men and women to have equal opportunities in employment or education, we cannot overlook the hurdles facing women in their quest for financial security.

In the current climate of low interest rates, putting your money in a savings account and leaving it there is no longer enough to build a financially viable future. Now, more than ever, we need to make our money work smarter, not harder. Investing provides an opportunity to do just that, by broadening our financial horizons and diversifying revenue streams.

Historically, one of the greatest barriers to financial investing is education. A recent survey by Bank of Ireland found that less than a quarter of people claim to have sufficient knowledge of markets and investment options despite there being a clear appetite for saving and wealth accumulation. The rise of retail investing has also left many new entrants to the space navigating an often complex environment.

Against this backdrop, education will be key in bringing Irish women to the investing table, helping to combat wealth inequality by arming them with the necessary information and resources to dispel any anxiety around investing.

Today, any institution or company offering investment options must aim to educate users about the value of different options. Income and circumstances will be influential in determining how people invest and they should be given the knowledge and resources that allow them to determine the difference between, for example, buying shares and buying ETFs. Crucially, those dipping their toes into the world of investing need to be cognisant of the risk inherent in each. Someone wishing to plan for their long-term financial future, should be made aware of the potential risks attached to highly volatile stocks.

Given the right tools and information, users are well equipped to avoid any of the common pitfalls and instead put themselves in pole position to make informed investments that help build long term sustainable wealth. Too often new investors are happy to put all their eggs in one basket. However individual stocks can be subject to extreme fluctuations, meaning that investors need to be taught the benefits of diversifying their portfolio to include stocks from a number of different sectors.

For example, with a global shortage of electrical chips, you might not want all your money behind companies whose products rely on electrical chips to work. For those dipping their toes in the water, an ETF investment can be a good starting point because it allows you to automatically diversify by investing in hundreds of stocks at the same time, depending on the ETF. Due to the broad diversification, profits and losses are better balanced and the risk decreases.

From a personal educational standpoint, investors should also try to find out about a company before investing, looking specifically at its fundamentals, market capitalisation, sector, and past performance.

That said, it is important to note that there is no ‘one size fits all’ approach to investing.

Everyone should invest in the way that makes the most sense for their personal financial situation. What matters most is you are not going in blind. Companies offering investment must strive to break down barriers to entry, educate people about their money, and ultimately make clearer a practise that has been overshadowed by jargon and mysticism for too long.

Most importantly, if women are to take control of their finances and build a viable future with multiple revenue streams that will stand them in good stead throughout their working life and beyond, they must be given the tools and education that will help them to do so.

More in this section

Sponsored Content

Add Echolive.ie to your home screen - easy access to Cork news, views, sport and more