• AJ Bell Money Matters takes a look at the reasons holding women back from investing
• Thirty four per cent of women don’t know the interest paid on their main savings account, compared with 26% of men
• Many of that group haven’t moved their main savings pot to take advantage of higher rates over the last two years 
• Do women have a different attitude to investing?

In celebration of International Women’s Day today, Danni Hewson, head of financial analysis and founding ambassador of Money Matters at AJ Bell, comments on just some of the reasons why women lag behind male counterparts when it comes to investment saying: 

“The gender wealth gap is alive and kicking. This was laid out in stark terms at the start of the year by headlines warning women that, on average, they’ll have to work for a whopping 19 additional years if they want to retire with the same pension as their male counterparts.

“Shocking statistics aside, the picture isn’t altogether straightforward. Women do have money, they do save, and looking back over the past five years of data I’m struck by the fact that women actually tend to be more likely to pay into ISAs than men. But women tend to favour the cash version over its stocks and shares counterpart.”

Number of people paying into ISA accounts (thousands)

Source: HMRC

Higher interest rates are unlikely to persist

“Right now, with interest rates higher than they have been in 18 years, that’s arguably less of an issue than it has been, but over time stocks and shares historically outperform. And looking back the numbers are pretty stark. £10,000 held in the typical Cash ISA for 10 years would have been worth £11,223 at the end of December 2023 (source: Bank of England). The average global equity fund in a stocks and shares ISA would have turned that £10,000 into £24,184 (source: FE).

“It’s a choice which contributes to the wealth gap that AJ Bell’s Money Matters campaign is trying to help narrow and with rates expected to fall rapidly from the middle of the year it is something that needs to be considered.

“Keeping track of interest rates is something that can languish on our to do lists and whilst the popularity of cash ISAs amongst women means impending rate cuts are a particular concern for women’s financial health, knowledge is power and there seems to be a surprising lack of it amongst both sexes.

“Thirty-four per cent of women surveyed by Opinium said they didn’t have any idea of the interest being paid on the product where the majority of their savings were kept, and whilst slightly more men were actively engaged with their finances, 26% admitted they weren’t sure either.

“Even more surprising was that of those people who did know the rate of return their savings were netting, 42% of men and 46% of women said they hadn’t moved their main savings pot over the last 24 months to take advantage of higher interest rates.

“Engaging with our finances can feel overwhelming and the fear of making a mistake can sometimes stop people from taking any action, ultimately leaving them worse off in the long term.”

Savings rate knowledge spotty amongst men and women

Source: AJ Bell, Opinium. Based on a nationally representative survey of 2,000 UK adults, carried out online between 26 January and 30 January 2024 by Opinium. Q6: Do you know the interest rate you currently receive on where the majority of your cash savings are held?

Why people don’t have an ISA

Source: AJ Bell, Opinium. Based on a nationally representative survey of 2,000 UK adults, carried out online between 26 January and 30 January 2024 by Opinium. Q4: You previously stated that you don’t have an ISA. For which, if any of the following reasons do you not have an ISA?

“When it comes to ISAs of any variety a lack of knowledge is still a huge barrier for both sexes. More than a quarter of women and almost the same percentage of men say they either don’t know enough about ISAs, that they’d not heard of an ISA before, or that they’d just not thought about it when it came to their finances. 

“On top of this, since the introduction of the Personal Savings Allowance many people have had no need of a wrapper to protect their savings interest from the taxman. Higher interest rates mean over 2.7 million people are expected to pay interest on their savings this year, according to data obtained by AJ Bell from a recent FOI request made to HMRC. 

“That’s a million more than last year and for many of those it will be an unexpected and unwelcome surprise. But there could be a silver lining to that story as people consider the options available. 

“Whilst cash ISAs have traditionally been the most popular form of ISA with women, the cost-of-living crisis has got more and more women talking about money and engaging with their finances in a way they haven’t before.

“The hash tag #recessionproof has generated over 85 million views on TikTok, whilst Facebook and Instagram are full of budgeting ‘finfluencers’.  

“Talking about money, ways to save it and ways to make more of it has become commonplace at the school gates, breaking a taboo that has persisted for generations. And once those conversations become even more commonplace some of the mystique should start to disappear. 

“Lots of column inches have been dedicated to the perception that women are more risk averse than men. What seems more accurate is that women tend to think about their finances in a slightly different way, such as needing to ringfence certain pots for things like helping their children get on the property ladder.

“For women who do take the step and plump for a stocks and shares ISA, the reasoning behind that decision is the same as for men – it’s about generating steady positive returns that beat cash savings options. Ringfencing certain pots, like an emergency fund, is smart, but given the right circumstance and the time horizon, risk isn’t necessarily bad, it’s just another consideration on the path to financial wellbeing.”