Fear of investing mistakes could cost Millennial women almost half a million pounds, claims research
Millennial women could be missing out on nearly half a million pounds by the time they reach retirement age due to investment fears, new research suggests.
Data from digital investment platform Moneybox shows that across the UK, women aged 30 to 45 save an average of £49,608 towards retirement, while men in the same age range save an average of £85,529.
However, by the time they reach retirement age, this difference can increase to £463,644.
The forecast is similar for Gen Z women and girls aged 14 to 29, who now have on average £31,000 less in savings than men and boys of the same age. This could result in women earning £1,691,395 less than their male counterparts in retirement, Moneybox suggests.
The research suggests that, in addition to salary differences, trust may also be an important factor in this gap.
“Many women are doing the right things, but the fear of making the wrong decision or losing money keeps them from fully dealing with their finances,” said Brian Byrnes, director of personal finance at Moneybox.
Fear and the pension gap
Women are much more likely than men to feel anxious when it comes to long-term finances; While almost a quarter of women (23 percent) state that they are worried about this issue, this rate is 15 percent for men.
In addition, nearly two in five women (37 percent) do not feel confident in managing or achieving long-term money goals, such as retiring early, and almost a third (29 percent) do not feel in control of their financial future.
Clare Seal, a financial coach who managed to pay off her own £27,000 debt, believes women’s financial anxiety is rooted in a “better safe than sorry” mentality, which “leads to a deep-seated fear of the stock market due to natural ebbs and flows”.
She said: “In my coaching, I see women worry about making mistakes, which can be much more costly in the long run than investing sensibly and responsibly. To close this trust gap, we must help redefine risk—not as a danger to be avoided, but as a necessary tool for growth.”
Get a free partial share of up to £100.
Capital is at risk.
Terms and conditions apply.
ADVERTISING
Get a free partial share of up to £100.
Capital is at risk.
Terms and conditions apply.
ADVERTISING
Eleanor Moir, 28, went through this journey herself when she started investing. Initially, he felt overwhelmed by the number of options out there.
“My biggest concern when investing is ‘where do I put it?’ “It was a question,” he said. “There are a lot of options out there, so I would say I’m not so sure.”
After talking to family members who were investing and finding information on platforms like AJ Bell, he finally took the plunge. Years later, he feels his self-confidence has increased. “I think you can’t control what happens in the market, but I’m less worried about the ups and downs.
“I feel more confident about what I invest in because I’ve had positive returns. When I make mistakes, I can correct what I invested in and continue investing based on what I’ve learned from that.”
Women are generally better investors
While confidence seems to hold many women back from investing, women outperform men when it comes to returns, according to a study by Revolut.
“It’s not a skills gap, it’s a confidence gap,” says Brian Byrnes. “The biggest change women can make is not to take big risks, but to build the confidence to get started, ask questions, and get busy. Overcoming fear is often the first and most important step towards a more secure retirement.”
Dr D., senior lecturer in finance at King’s Business School. Ylva Baeckstrom agrees that women are talented investors.
However, he looks at the solution differently. “Marking women as insecure does not work as it puts the onus on women to correct outdated and complex ways of communicating financial investment rather than correcting them,” she said.
“The financial services industry and policymakers need to make personal finance accessible and attractive to underinvested groups, including women.”
Gender isn’t the only factor when it comes to trust
Perhaps unsurprisingly, data from Moneybox also shows that financial confidence generally increases as household income increases.
But a recent study on financial confidence by Octopus Money shows that people from less privileged backgrounds are often less confident that they can retire comfortably compared to people from wealthier families, even if they earn the same salaries.
Ruth Handcock OBE, CEO of Octopus Money, said: “Two people can earn the same salary, but while one saves and plans ahead, the other constantly worries about making ends meet.
“It’s not about effort, it’s about knowledge. No one can teach you how to manage money if you haven’t grown up around it.”
