Thursday, 25 September 2014

The Feminine Touch

At the weekend I was reading Tim Hale (again) and I came across this statement:
"Overconfidence destroys wealth. Men tend to be more overconfident than women... men trade 45% more than women, This is reflected in risk-adjusted returns 1.4% less a year than women". (Hale. T., Smarter Investing, 3rd ed p89)
Apparently we women have something in our genes that makes us better investors, just like we are statistically better drivers and probably for much the same reasons. We tend to be more cautious, less aggressive and less inclined to take risks. (I just wonder how long it will be before some bloke turns this around by saying that although women are involved in less investing "accidents" they cause them by not getting out of his way fast enough :-))

It's such a shame then that so few of us actually do it. Maybe that's because we don't have control of as much of the wealth. Research in 2013 showed an average 17% difference between the wealth held by men and that held by women whilst:
"At one point, between the ages of 24 and 34, the Wealth Gap can be as wide as 185 per cent with men claiming an average wealth of "£21,827 compared to just £7,648 (by women)."
There an interesting article in April's Money Observer discussing how men and women differ in their attitudes towards investing and yet another in July which carries this infogram

This is all pretty serious and we really should get our act together, especially as far as pensions are concerned, because we're lagging seriously behind our male counterparts:
 "Women retiring this year are nearly three times as likely as men to have only the state pension to live on, according to a report by the insurer Prudential. Some 20% of women, who often take career breaks or work part time to support families, said they have no other pension provision, compared with 7% of men, the research found" (The Guardian April 2014).
I'm absolutely not in favour of creating further financial "dependency" by putting in place statutory measures to tie women's finances to men (as seen with the old "married women" reduced NI contributions etc) but I really don't see how we can ever be playing on a level pitch with men due to the time we spend out of the labour market having, and raising, kids. Or for the fact that we aren't given jobs even if we have no intention of doing so ( 40% of employers would rather employ a young male rather than a young female just on the basis that he won't be asking for maternity leave).

I am lucky in that I have managed to reach the same level of earnings as my husband (having got my MSc as a mature student after the kids went back to school) but I was financially dependant on him for the 10 years I was at home whilst they were little. It can be very uncomfortable indeed, even if it is never raised as an issue, as you can't really avoid feeling that you don't deserve as much of a say in the household finances. Unfortunately I'm not sure that there is a way round this, especially given the fact that such low status is traditionally given to the job/career of bringing up children. Financial equality between the genders is a really hard nut to crack and it may never actually be achieved.

Depressing though that thought is, we do have to deal with it and it seems to me that the only way that women can really support themselves to the same level as men is to be extra clever, start very early, use our innate "cautious" gene to invest well, save more than our male counterparts in those precious pre-kids years (which are also unfortunately the expensive "freedom years" for leisure and travel) and build a career that will welcome us back once family responsibilities lessen. In the meantime employing all our organisational skills and attention to detail to the task of living well, but frugally. Job done :-)

Of course, all this is generalisation. In our household I do all the investing but I do have to make sure that I manage my husband's ISA at a far lower level of risk than I do my own, as he is of a far more cautious bent than I. I'm pretty sure that he would not be comfortable with the risk profile of a couple of my funds, but he tends to act in much the same way as I sometimes do when he's driving - he closes his eyes, crosses his fingers and lets me get on with it.


  1. Interesting post. I'm afraid I'm guilty of leaving all the finances to my other half, but as he's an accountant and I write crime fiction I think he's better placed to understand these matters. I just earn the money as fortunately my books are successful. Not sure I'd do so well at investing money. Of is that just an excuse? I'm actually not sure. You've made me think now...

  2. Sorry Leigh, you caught this post at draught stage - I hadn't meant to publish without filling the gaps as regards the quotations etc, but seeing as it's out there :-) - it may well have been edited next time you get round to reading.

    Having an accountant on tap can be classed as making good use of available resources. No shame there. But maybe you would feel more comfortable if you understand the mechanics of what is happening financially. It wouldn't hurt would it?

    1. btw In another incarnation I edit Tangled Web books (we have you listed). Concentrating on your writing is not something that should be discouraged :-)

  3. Oops, I've appeared to have stumbled upon the unfinished article too, Cerridwen...I'll come back again when it's finished!

    Coming here's not all gone to waste though - I just checked up on Leigh Russell and bought one of her books off Amazon as I've been looking for new British crime-writers to read! Might be a while before I read it though - have a big To Read list!

    1. Hi weenie - yes, sorry about that. I was putting down some thoughts whilst having a G&T in the pub waiting for my bus home and published by mistake. Hope you enjoy the book. :-)

    2. Ok am back - good insight into how you draft your posts! :-)

      Even when not taking time out of the workplace to look after children, there is still a gap in wages between men and women.

      According to this report - , the pay gap is 23%. I can understand that as a whole, some women will take low paid jobs such as cleaning and shop work, which men would not do, and which would pull the average wages of women down. But this was a survey of 68,000 professionals, so office men and women, likely doing the same jobs. It really is unfair.

      The gap gets bigger from the age of 45 and above...I'm trying hard not to think about it as I shoot daggers at my male colleagues haha!

      I suspect that you are right in that women need to help themselves by being clever and cautious.

      A couple of my friends need to get saving and investing but I can't talk them round, despite dropping hints!

  4. A great article, love the graphic.

    I completely agree that it's such a waste that fewer women invest than men, and I'd encourage women to take more risks and go for it. I wonder what would have to change in society to change the status quo?

    Although it could be directly related to disposable income and as weenie points out, loads of women take part time and lower wage jobs, leaving less available funds.

  5. Thanks gfc. The depressing thing is that research suggests that women are actually moving backwards in the fight for equality in employment