Women’s finances have been really hammered by coronavirus, hitting working mothers particularly hard.
For International Women’s Day, I wrote a post about it over on the PensionBee blog, including ways to lessen the impact.
Check out my post here (affiliate link)
It includes just a few of the slew of statistics showing how the pandemic has damaged female financial health.
Researching the post made me frustrated and furious.
Everyone from banks, trade unions and think tanks, to consultants, city watchdogs parliamentary committees and equality campaigners has been queuing up to reveal the disproportionate career and financial impact on women. Coronavirus has set back the gender pay and pensions gaps by decades. Single mothers and minorities come off even worse.
At heart, it all comes down to the decisions made by individual families: who continues working, and how much, after having children? Who continues working, and how much, after Covid hit and schools shut down?
Time and again, it’s the mother who ends up doing paid work for less time and lower salary, bearing the brunt of childcare.
It’s no coincidence that I’m getting round to writing this piece after schools re-opened. It’s the time both my children have been back at school in nearly four months. While juggling home learning, housework, making meals and meeting deadlines, my blog moved to the back of the queue.
As I say in the post for PensionBee, it’s not that my husband doesn’t pull his weight. But he is employed full-time, so it was easier for me, being self-employed, to dial down work so I could cope with childcare.
Why investing is vital for women’s financial futures
Now, as things return slightly more to normality, perhaps we can take a breath and think of the future.
Fundamentally, if women are going to catch up financially, we need to make our money work harder. Stashing cash in a savings account just isn’t going to cut it, when interest rates are so low.
Everyone needs some savings for a rainy day – the hurricane of the pandemic has certainly rammed that home. But beyond that, we need to invest in the stockmarket for the chance of higher returns. Yes, investing does bring the risk that you can get back less than you put in. But longer term, the returns, on average, have beaten the living daylights out of savings.
Grasping around for a silver lining to lockdown, at least some people have saved money, with so few places open to spend it. Many have also been prompted by the pandemic to focus think about their finances.
Why use spare cash to invest
I was heartened by signs of increasing openness to investing in a survey by robo adviser Nutmeg (referral link).
A fifth of women had more money to invest than pre-Covid, and a third hold more in investments. More than a quarter are now more likely to research ways to maximise their returns.
Our motivations seem more driven by fear than men, focused on avoiding future disasters: 54% of women want to feel financially stable (vs 46% men), 43% put saving for life’s emergencies as a top priority (vs 33% men) and the top reason for increasing investments was as a financial buffer against unexpected events (22% vs only 7% for men).
How women can start investing after coronavirus
One part that caught my eye was that more women seem to prefer a ‘do it for me’ approach to investing, rather than DIY stock picking.
Half as many are more likely to make and manage specific investments for themselves (16% women vs 33% men). Meanwhile a third as many are more likely to invest in particular companies they saw or heard about (12% women vs 32% of men).
This resonated with me, as someone who has always shied away from choosing shares in individual companies. I prefer using funds or robo advisers instead, where someone else agonises over the right combination of investments. I’ve written before about the benefits of ‘set and forget’ approaches to saving, where you set everything up at the start, then let things look after themselves. Using the same approach to investing lets you get on with the rest of your life.
Previous post: How to save despite yourself
Barriers to investing
So what’s stopping more women from investing?
The biggest barrier cited, by almost half of the women interviewed, was not having enough money.
This did make me wonder how much they think is needed.
Sure, investing is only possible with spare money, not stuff needed for food and bills right now or even over the next few years. But you don’t need to be swimming in moolah to invest.
Several of the investing websites accept from just £1 – such as Wealthify, Moneybox, Wealthsimple and evestor. Many of the longer established players don’t need much more, especially if you can sign up for regularly payments (for example £25 a month after a £100 investment with Hargreaves Lansdown, £100 a month with Vanguard, £500 lump sum for Nutmeg).
If investing is all new, and you’re concerned, try doing what I did and opening a test account with a smaller amount.
Siphoning off even a little spare cash into investments will boost your chances of a more comfortable (and disaster free) financial future. Despite covid, and despite family commitments.
Now – over to you. What’s stopping you? Do share in the comments, I’d love to hear.