Although it’s all too apparent now that gender affects our pay, expectations, duties and financial responsibilities, it wasn’t until recently that we began to realize and acknowledge it. It’s a complicated mess with no straightforward answers and fewer straightforward solutions. For instance, when it comes to the gender pay gap, equal pay for equal work is something we can all agree on. However, looking at statistics released by the US Bureau of Labor and Statistics, women simply aren’t choosing the highest paid careers.
So the answer is to facilitate women’s interest in fields that pay better but then we hit another roadblock, or two. Lower paid fields and part-time work tend to be more flexible for parents and caregivers, roles that women are unequally tasked with. Even when jobs require the same skills and degrees, those dominated by women, tend to be undervalued as well. What simply began as a "yay for equal pay" solution, now turns into renegotiating how our entire society works. Here’s another frustrating pay gap you may not have heard of, the gender investment gap.
A report produced by Black Rock found that, in addition to the gender pay gap, American women face a gender gap when it comes to investments for retirement. So what gives? Similar to the gender pay gay, the gender investment gap is the result of both societal circumstance and the personal decision.
Basically, women tend to invest less than their male counterparts and accumulate more wealth in cash versus stocks, that have more risk but a better potential for payback. When you factor in lower pay and longer lifespans to our risk appetite, it doesn’t look good. Women not only don’t invest as much as men do but they don’t start as early as they do, which has consequences for their long-term savings, especially since on average women live longer.
When women do invest, they tend to outperform their male peers by almost a percentage point per year, results that were released by Time Magazine and later replicated by Fidelity. With this in mind, companies and startups have been scrambling to create gender-specific platforms, taking into account significant life events that affect men and women unequally like raising a family or potential gaps in pay.
In fact, one of the most well-known gender specific investment platforms is Ellevest, it’s a woman centric investment firm. When women do invest they do well, panic less with market fluctuations and make better investment decisions, so how do we close the gap from here?
The answer is simple but effective, women need to start investing as early as possible. The majority of investment platforms are gender neutral but tend to cater to the market, which is mostly male. Finding investment platforms that account for the salary differences, career path differences, preferences and longer lifespans of women can make all the difference.
Since many of us, male and female find the world of investments confusing or downright scary (what if we lose money?!), exploring platforms that offer robust customer support and customer friendly reports and graphics is a plus. Ellevest was mentioned earlier, but they’re not alone.
They’re apart of a wider trend of tailored financial service advisors who also make reports available to customers that are easy to read and understand. Similar apps and websites exist, often for free online or in the app store. Women tend to be more risk aware so starting out with a diversified portfolio is another good tip. In addition to diversified portfolios, smaller deposits can also be made periodically as opposed to making larger contributions straight away.
Most of us have some form of investment already, usually through an employer-provided 401(k). Understanding how our investment works, seeing if our employer will match funds and doing a few checkups to ensure that we’re getting the best benefit possible is key here.
So, in the end, there is a gender gap when it comes to investing, but don’t let that stop you! The key is to act fast, act smart and act now. In addition to this quick acting attitude should be a thorough understanding of your investment options and an advisor who understands the nuances of your specific social and financial situation.