Lately, women hear a lot about gaps: how to combat the gender pay gap, how to avoid a resume gap when you take time off to raise children, whether or not a thigh gap matters (it doesn’t).
One “gap” that isn’t discussed enough is the gender investing gap.
Women Are Less Likely to Invest Than Men, and That’s a Problem.
According to Ellevest, an investment platform created by women for women, “of all the assets controlled by women, 71% is in cash – aka not invested.” Statistically, women are less likely to invest, and even those who do invest tend to wait until they are older to start.
Most women don’t think they know enough about investing to properly grow their savings; therefore, they wait to start investing until they feel they’re more financially stable and believe they can risk the possibility of losing money. A common misconception around investing is that you have to be an expert in the industry to succeed when the reality is that there are so many tools and resources that make easy to start investing with as little as your pocket change.
Why Should Every Woman Invest?
According to a study by Merrill Lynch, 41% of women wish they invested more of their money. But why is it such a necessary part of personal finance?
First and foremost, it’s important for women to be able to achieve a sense of financial equality and independence. In the face of issues like the gender pay gap and the pink tax, investing is one of the best ways for women to ensure that they have the potential to accumulate the same amount of wealth as men.
“It’s important for women to be able to walk away from situations that are hurting or not serving them – whether that’s a bad job or a bad relationship,” comments Ellevest’s Susan Thompson. “You should be able to have your own financial power to make decisions that enable you to care for yourself.”
Reaching Financial Goals
Whether you are looking to go back to school, save up an emergency fund, send your kids to college, save up for a large spend like a house or wedding, or just grow your overall wealth, investing is arguably the best way to reach those goals.
Saving for Retirement
Women earn approximately 83 cents to every dollar a man earns, on average. That means that even if we’re saving the same percentage of our income as men, we’re not going to save the same amount. In addition, women also tend to live longer. Basically, less money has to last longer when women simply save their money without an investing strategy.
Many employers do a match on a 401(k) or similar retirement savings plan. If you’re unsure about whether or not investing is really a good option for you, enroll in your employer’s program and watch as your savings grow.
Why Is a Savings Account Alone Not Enough?
Cash that sits in a checking account, safety deposit box, or under the mattress is actually depreciating in value year-over-year because of inflation. That means you’re essentially losing money when you aren’t actively growing your savings.
Check out the chart below, and you can see that a solid investments strategy can help you grow your savings exponentially over the course of 10, 20, and 30 years.