Why women need to start investing after coronavirus

Picture of snowdrops for my post about how women need to start investing

Growing any money left after Covid

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 first 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.

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 on 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.

 

Previous posts:

Battle of the robo advisers: Nutmeg, Moola and Wealthify vs Vanguard

Robo advisers results: Nutmeg and Wealthify vs Vanguard year 2

Which Vanguard LifeStrategy fund is right for you?

Moneybox review after three years

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18 Comments

  1. 14th March 2021 / 10:05 am

    This was really interesting, thank you! I’m doing a lot of reading around FIRE as I’m taking small steps at the moment (increasing emergency fund, overpaying mortgage, and short-term savings goals).

    I guess for me the worry around investing is the “value of your investment may go up as well as down”. The principle behind that is fine, I know there’s a risk. But I worry that I could end up *owing* money if things plummeted too far. For example, if I invested £100 in 5 shares of Company X at £20 a share, and the value nosedived to £5, would I somehow owe money?

    Now that I write it out I can see that it doesn’t really make sense, and that in reality I wouldn’t owe anyone anything, I would just have £25 worth of shares instead of £100 worth. But it’s something that I’ve been worried about for a while. I’m sure there must be a lot of other misconceptions around investing that put women in particular off the idea. From reading the FIREUK Reddit I can see that with things like Vanguard you can pick something that matches your risk appetite, and just leave it to tick over in the background, I wonder how many women think “I can’t pay attention to the stock market, I have the kids to look after”, without realising it’s something that can just be fed through the year and just checked every couple of months.

    Sorry for the long comment, again this has been really helpful!

    • Faith
      Author
      15th March 2021 / 8:31 am

      Hi Katie,
      Good luck with reading up on FIRE and exciting if you’re making great steps to improving your finances!
      As you say, although investing does carry the risk of losing money, you won’t end up owing money you hold a stake in a company that goes bust. Personally, I’m a big fan of things that tick over in the background, hence investing in funds including the Vanguard LifeStrategy range and trying out some robo advisers.

  2. Rachel Edmonds
    19th March 2021 / 6:48 am

    I came across this piece because I’ve been thinking about investing and really don’t know much about it and my main concern was how much money I need to invest. Now I’ve read this I’m going to set up an account and start off small. Who knows I might just get lucky.

  3. 19th March 2021 / 6:48 am

    I came across this piece because I’ve been thinking about investing and really don’t know much about it and my main concern was how much money I need to invest. Now I’ve read this I’m going to set up an account and start off small. Who knows I might just get lucky.

  4. Alison
    21st March 2021 / 1:21 pm

    One of my concerns is how to pick ethical investments?

  5. Tia
    16th July 2021 / 10:50 pm

    I struggle because I’ve started investing in a roboadviser as I thought it’d be good to start somewhere (I’m 19) and then get almost shamed for using a roboadviser? And should be picking myself. I’m currently with wealthify as I thought I’d be best starting at least instead of doing nothing, but now I feel like I’m not doing it right 🙁
    I also don’t know how much to put into stocks and how much to risk. I wish there was more education on this matter, I’m glad I found your blog!

  6. 8th October 2021 / 2:11 pm

    This is a really awesome and helpful article for me. I really appreciate your work for providing such useful information, thank you so much!

  7. 17th October 2021 / 12:25 pm

    That was a great post. Loved how you have portrayed the entire story and offering some great investment planning advice.

    • Faith
      Author
      19th October 2021 / 9:08 am

      Thank you!

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    It was quite beneficial information! I’m just starting started with this, but I’m getting a lot better at it! Thank you very much, and keep up the excellent work.

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