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Gender ISA gap doubles in a decade

Paloma Kubiak
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Paloma Kubiak

Women are paying the price for sticking to cash, while men reap the rewards of opting for stocks and shares ISAs, widening the gender ISA gap.

Around 4.4 million women only took out a cash ISA in 2018/19, compared to 3.5 million men.

While they’re more likely to opt for cash, men are more likely to have a stocks and shares ISA.

The latest figures from HMRC revealed over a million men took out a stocks and shares ISA in 2018/19, compared with 785,000 women.

As stocks and shares tend on average to outperform cash over the long-term, women are paying the price for sticking with cash.

Men have an average ISA holding of £30,089 while women hold an average of £27,098.

This results in a gender ISA gap of £3,000, up from £2,812 a year earlier, and almost doubling in a decade from £1,550 in 2008/09.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “Despite the super-human effort women are making to build their savings, the gender ISA gap has almost doubled in a decade to around £3,000. Women hold 52% of the UK’s ISAs, but they’re hampered by the fact so much of it is in cash.

“On average, women earn less than men, and the more you earn, the more likely you are to have an investment ISA. It tends to reach a tipping point when our income reaches £30,000 – before then we’re more likely to have a cash ISA, and after that we’re more likely to favour stocks and shares.

“Women also tend to have less secure incomes, so some may feel they cannot face the risk involved with investment. It does certainly mean facing the risk that investments will rise and fall in value over the short-term.

“However, the way we tend to assess long-term risk is faulty. Women tend to over-estimate the risk that investments will lose money over the long term – overlooking the fact that on average they tend to rise. They also underestimate the risk their cash ISA will lose value after inflation. With the best easy access ISA without restrictions currently paying 0.66%, and inflation running at 5.5%, this is a racing certainty.”

Coles said the gender ISA gap is set to grow as for 2018/19, men made up 57% of those paying into a stocks and shares ISA, up from 56% a year earlier, and 55% in 2015/16.

She added: “However, more recently there are signs of more women considering investment. Our figures show that the number of women transferring a cash ISA to an HL stocks and shares ISA in 2021 was higher than a year earlier. They also made up a bigger percentage of those making the switch – at 42%, compared to 37% a year earlier.”