'I started in my 20s and made £8,000': Why women are often better investors than men

New analysis indicates that women who invest their money tend to achieve slightly higher long-term returns compared to men, according to recent research. However, women's participation in investing remains relatively low in the UK, with only about a quarter of women investing, compared to around 40% of men, according to a separate report. This article delves into the factors contributing to these trends and the differences in investing approaches between men and women.

One woman who began investing early in her career is Teleri Evans, who started saving for a house deposit at the age of 25 by opening a Help To Buy ISA and a Lifetime ISA. By the time she turned 33, she had accumulated £40,000 in savings, with £8,000 coming from returns on her investments. Evans attributes her success to aggressive saving and living with her mother to maximize her contributions to the Lifetime ISA.

According to a study by Boring Money, the percentage of UK women investing is significantly lower than that of men, standing at 26% compared to 41%. This disparity is largely attributed to cultural factors, as per Gillian Fleming, co-founder and managing director of UK-based Mint Ventures, a women-led angel investment firm. Fleming notes that historically, men have been more involved in family investment decisions, while women have traditionally not been the primary wealth holders.

However, she believes that attitudes are changing, and women are increasingly discussing money and wealth creation.

Research by Fidelity International found that when women do invest, their cumulative returns over three years are 50%, compared to 47% for men. While the exact reason for this difference remains unclear, it may be linked to the fact that women tend to trade less frequently than men. Barclays data shows that women are around half as active in trading as men.

Barclays' Joanna Floyd, a business psychologist, suggests that women's more restrained approach to risk, which often prevents them from entering the market in the first place, is the same trait that leads to higher returns once they are invested. This cautious approach to risk is also evident in other areas of finance, with women being more inclined to choose certainty over potential financial gambles.

Fleming emphasizes that women are generally more cautious investors. She observes that men tend to focus on the rate of return, while women prefer to invest more broadly across various sectors, including retail, food and drink, health, beauty, fem tech, and creative industries. Women also appear to place a greater emphasis on the societal impact of their investments and ensure that they align with their personal values.

The investment sector must work to make investing more accessible and relevant to women by connecting it to their personal goals and values, according to investment strategy director Anna Macdonald from Hargreaves Lansdown. Addressing this issue would benefit women's long-term financial resilience and contribute to the UK economy's overall growth.