The investment gap

Do you talk about how thrifty you are? Or do you talk about how you make your money grow?

The way you talk about your finances may reveal your gender as well as your attitudes to money. It’s often said that women tend to talk about how they save, while men talk about how they invest.

It’s a gender split that can have real consequences for women’s lives, now and in the future.

Women already have the odds stacked against them: a gender pay gap of around 9.5%, the decision to take career breaks while they raise children, and a longer life expectancy to fund in retirement.

Focusing on saving rather than growing their money can make it even harder for Kiwi women to achieve their financial goals. An investor confidence survey by the Financial Markets Authority found women were more likely to doubt themselves as investors and were far less willing to take on investment risk.

On average, women are 18% financially worse off than men when they reach retirement.

So maybe like the call from this year’s International Women’s Day, it’s time to “choose to challenge” these statistics and get women making the most of the money they earn.

These 4 steps can help you get started investing:

One: Know your power

A study by Warwick Business School in the UK is just one of many pieces of research to find that women are better investors than men.

The study found that women outperform men at investing by 1.8 percent. Women were more likely to think long-term, more likely to invest in stock with a good track record and less likely to hold on to under-performing shares.

Two: Give yourself a buffer

Closing the Gap, a New Zealand social enterprise dedicated to getting more women into investing, suggests creating a savings buffer – enough money to cover at least three months’ worth of expenses – before you start investing.

Three: Educate yourself about investing

When you’re starting out as an investor, a good first step is to learn some basic investing concepts.

You could begin by learning about diversification (not putting all your eggs in one basket), compound interest (earning interest on top of the interest you’ve already earned, as well as your deposit) and the main types of investment products (such as shares or managed funds).

There are lots of finance blogs and online tools that can help, such as Sorted.

Four: Make KiwiSaver work for you

If you have a KiwiSaver, you’re already an investor.

Yet Gillian Boyes, the FMA’s investor capability manager, says women are more likely than men to be uncertain about what type of KiwiSaver fund they’re in, and about whether their scheme is good value.

They’re also less likely to have checked if the scheme is on track to produce the income they need in retirement.

Gillian says you can make your KiwiSaver investment work for you by:

  • comparing funds, if you're with Kiwi Wealth you can use our personalised digital advice tool to check you’re in the right fund for your needs. Log in to myKiwiWealth to give it a try.
  • keep paying at least the minimum contribution.
  • accepting more risk for the possibility of higher returns, depending on how long you’ll have to invest before you need your money.

This information is provided in a general nature only and should not be construed as or relied on as financial advice. This is not a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any investment decisions.

Past performance is not a reliable indicator of future performance. The value of your investment may go up and down.