Men happier to take investment risk, leaving them better off
New research from Aegon shows an investment gender gap: Less than a quarter (24%) of men are likely to invest any extra money they have into riskier investments such as stocks and shares compared to 14% of women. Just 6% of women compared to 17% of men say that they are comfortable taking risks with their money.
This may seem prudent in the short-term, but stock markets have generally given a stronger return than other ‘safer’ investments over the longer term. At the same time, cash savings accounts often pay less than inflation, which means that they lose money in real terms over time.
Only 34% of women said that they are confident that their chosen savings and investments will deliver strong returns over the next five to ten years, compared to over half (51%) of males surveyed. This lack of confidence pushes women towards lower risk options. They also have lower expectations on potential returns.
Research shows that women are more likely to opt for lower returns for minimal risk, with under half (46%) of men compared to 65% of women, saying that their risk appetite is low or zero, preferring minimal potential losses with modest gains. Only 8% of women have a high or adventurous approach to investment risk, compared to 18% of men.
The most recent Barclays Equity Gilt study, which looks at the long-term returns for different asset classes showed that $100 invested in 1925 would now be worth $512,045 if it had been invested in the stock market, $14,230 if it had been invested in 20 year government bonds and just $2,098 if it had been invested in cash. While these are US figures, the UK market has shown similar disparity of returns.
Nick Dixon, investment director at Aegon said: “Our research shows that, compared to men, women are more likely to lack confidence when it comes to making investment decisions and hold back from taking risks with their investments. There a number of societal, behavioural and economic reasons why this is the case but the reality is that avoiding risk generally leads to lower returns. Over the long-term, exposure to a diversified range of risk assets typically leads to greater returns than the perceived safety of cash.”