'I started in my 20s and made £8,000': Why women are often better investors than men

"I started in my 20s and made £8,000": Why women are often better investors than men

Teleri Evans leveraged her investments to secure a deposit for her initial home.

New analysis indicates that women who invest their money achieve slightly superior long-term returns compared to men. However, a separate report reveals that only about a quarter of UK women hold investments, in contrast to approximately 40% of men. We have examined the data underpinning these trends, which unveil surprising distinctions in how men and women approach investing.

Teleri Evans was 25 when she began contributing to a Help To Buy ISA, and a couple of years later, she opened a stocks and shares Lifetime ISA. By the age of 33, she had accumulated £40,000, with £8,000 of that sum being returns from her investments. "I saved aggressively, and lived at my mum's for half of that time, so I could save as close as possible to the maximum £4,000 per year into Lifetime ISA," she states. The Cardiff-based civil servant utilized the funds for a house deposit with her partner earlier this year.

According to a study by the consumer finance website Boring Money, only 26% of UK women invest, a figure that drops to 23% for those under 45. Conversely, 41% of all men invest, remaining consistent at 40% for those under 45.

So, why are fewer women investing than men?

Gillian Fleming, co-founder and managing director of UK-based Mint Ventures, a women-led angel investment firm, attributes this largely to "culture." She explains, "Men historically have been more likely to make family investment decisions, and women have also historically not owned the balance of wealth, but that is changing now." Fleming adds, "Also, money and wealth creation is not a topic that women often discuss, and we would like to change that." Teleri notes a recent shift, stating, "Investing is definitely something that women are talking about more, which is always a good thing. That's the case with my friendship group."

When women do invest in stocks and shares, an analysis by Fidelity International found that its female personal investing customers recorded cumulative returns of 50% over three years, compared with 47% for men. The analysis does not pinpoint the reason for this difference, but why might this be the case?

One potential explanation for women's slightly higher long-term returns lies in the frequency with which they buy and sell their investments. Barclays data indicates that women trade approximately half as often as men. Joanna Floyd, a business psychologist at London-based The Work Psychologists, suggests this could be because women are more patient and risk-averse. "Studies show that male investors trade more than women, chasing higher returns, but women actually get higher returns," she says. "The restraint that keeps women out of the market in the first place is the very same thing that rewards them once they are in it." This more cautious approach to risk extends beyond investing, with women more inclined to choose certainty when faced with a financial gamble.

Regarding how women invest, Fleming states they are deliberately more cautious. "Women are often accused of being more risk adverse, we call it more risk aware," she says. "Certainly from speaking to male investors their main focus is on the rate of return." Fleming also observes that women appear to invest more broadly. "Men are more likely to invest in technology companies for their higher potential returns, whereas women want to invest in a broader range, from retail to food and drink, health and beauty, fem tech and creative industries."

Anna Macdonald, investment strategy director at financial services company Hargreaves Lansdown, concurs that women carefully select the companies they invest in. "Women appear to place relatively greater weight on where their money is going and what impact it might have, as well as the reassurance that an investment is right for them," she explains. "Our research suggests men are...more readily attracted by the potential financial return."

Jemma Slingo, pensions and investment specialist at investment firm Fidelity International, notes that female investors "appear more likely to connect investing with real-life goals, from building emergency savings to looking after children."

It is crucial to remember that women in the UK generally have less money to invest than men due to the persistent gender pay gap, which means they earn less on average. Macdonald emphasizes that the investment sector "needs to do a better job of making investing feel accessible, relevant and connected to people's own goals and values." She concludes, "Addressing this would be good for women's long-term financial resilience and for the UK economy."