Women, why are we falling behind when it comes to investing?

Back in 2005, the Centre for Economics and Business, estimated that by next year, 2025, women will hold 60% of the UK’s wealth. But, according to the FCA’s Financial Lives 2022 survey only 29% of women hold investments in comparison to 46% of men, presumably with the rest of our money sitting in cash.

The problem with cash – Inflation risk

The problem with cash is that its buying power can be eroded by inflation.

But what does that mean?

A good example is a pint of milk. It’s currently selling in your local supermarket for 90p but in 2020 it averaged 45p. That’s a lot less milk today for 90p!

By keeping savings in cash, it’s unlikely that it will keep pace with inflation. Even if it’s earning interest year on year it might not have the same buying power as it does today.

Investing to boost savings

Investing in stocks and shares is a powerful way to achieve a financial goal, such as buying a home, funding education, or purely trying to maximise returns. By investing in the stock market, women can benefit from higher potential returns compared to traditional savings accounts, which are often eroded by inflation over time. This approach allows for the growth of capital, in order to accumulate wealth more effectively and meeting financial objectives within a specified timeframe.

Where to invest? The benefits of a Stocks and Shares ISA

One of the most advantageous ways for women to invest in stocks and shares, in the UK, is through an Individual Savings Account (ISA). An ISA provides a tax-efficient investment vehicle that can significantly enhance the growth of savings. Each tax year, individuals can invest up to a certain amount (currently £20,000) into their ISA, and any returns, whether in the form of interest, dividends, or capital gains, are completely tax-free.

This tax efficiency means that women can maximise their investment returns without worrying about the impact of taxes on their gains or when it comes to withdraw the money. Over time, this can result in substantial savings. The ability to reinvest returns without the drag of taxes also allows for additional compounded growth, which can accelerate hitting those financial goals.

How to get started

Stocks and Shares ISAs are easy to set up and manage, it doesn’t have to be a lump sum investment, there is the option to invest on a regular monthly basis too.

Stocks and Shares ISAs offer control over investment choices, it’s not a case of one size fits all. This flexibility allows for the creation of a diversified portfolio tailored to individual risk tolerance and investment preferences.

For women looking to achieve their financial goals, investing in stocks and shares through an Individual Savings Account (ISA) is a smart and strategic move. The potential for higher returns, combined with the tax-efficient nature of ISAs, makes them an attractive option for building wealth. Investing wisely today can provide the resources needed to accomplish tomorrow’s dreams, empowering women to take control of their financial future.