Entrepreneur, investor and former Apprentice contestant Jackie Fast suggests women should have an ‘investment pot’ that is at least 10% of their salary.
According to recent research, most British women admit that they would rather talk about pretty much anything (even death!) other than their personal finances. Whether it’s how much we earn or how much debt we have, the general consensus is that we don’t want other people knowing about what we do or don’t have in the bank.
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I’ve always been into investment and while other women my age were splurging on handbags and holidays, I started investing from the day I got my first pay cheque. But I quickly learnt that I am the exception, rather than the rule and that many women are quite simply terrified by the idea of investment. To get to the bottom of the problem, I decided to conduct my own research to find out exactly how bad the situation is, and what’s fuelling it.
Sadly, the data doesn't paint a pretty picture. For every £1 invested by men, just 59p is invested by women, and a staggering two-thirds of British women don’t have any forms of investment at all.
When probed on the reasons why, two-fifths (46%) of British women said that they don’t have enough cash to invest, despite the study revealing that most women spend an average of £211 a month on everyday treats such as takeaway coffees, meals out, beauty treatments and clothes. Furthermore, more than a quarter (28%) said that they were baffled by the different types of investment, compared with just 15% of men; and one in 10 (13%) said that they would rather spend spare cash on clothes, holidays, and going out.
With the average monthly amount invested by women coming in at £98, compared with £166 for men, this means - assuming that the average investment sees 5% annual growth - men stand to earn £74,596 over 20 years compared with just £43,950 (with compound interest) for women.
Here are my top tips for getting started:
Investment doesn’t have to be hugely complicated and you can get to grips with the basics by spending just a few hours researching, which is a small price to pay when you think about the amount that you potentially stand to earn. Plus, there are countless resources out there to help you - many of which are free. Check out The Money Advice Service as an example.
2) Try my 60:20:20 investment strategy
One in 10 women blame their lack of investment on not knowing how much they should spend on investment schemes each month. Plus, when you consider that most financial advisers are men over 50, you can see how a market standard approach is likely to be heavily biased towards men’s preferences and salaries.
In my opinion, women should have an “investment pot” that is at least 10% of their gross salary. This might sound like a lot - but unless you start taking investment seriously and make a proper financial commitment, you’re never going to reap the benefits.
Try my 60:20:20 strategy, which involves putting at least 60% of a stocks and shares Isa towards low-risk opportunities, 20% into a medium-risk stocks and 20% into high risk, high return schemes, such as crowdfunding or enterprise investment schemes (EIS). This approach will allow you to ease yourself into investing while maximising your profits.
3) Don’t just stick to what you know
Investment does not have to revolve around traditional routes, such as a stocks and shares. I recently became a board member of The Money Platform, a peer-to-peer lending service where individuals can borrow and loan money in a safe way. Lenders can get a great return on their money and you don't have to have huge amounts of spare cash to get started.
4) Make investing a priority
If you wait until the end of the month before looking at what cash you have left to put into investments, having spent hundreds of pounds on clothes, beauty treatments, and nights out, the chances are that you won’t have very much to work with. Invest first as a priority and view it as a standard outgoing - and then you can spend what you have left on life’s little luxuries.
Even though there are significantly fewer women out there who are regularly investing their money, numerous studies show that they have much better financial returns. This is because women are better savers and they don’t get as overconfident when making big investment decisions. Follow my tips and try to factor investment as a regular monthly expense, and it might turn out that “slow and steady wins the race”.
5) Empower yourself
Investing isn’t for everyone and there’s no denying that there’s always a risk involved. However, by learning about your options and evaluating what cash you can realistically afford to spend, you’re empowering yourself to make educated decisions. Even if you decide not to take the plunge just yet, at least you’ve based it on real research.
Jackie Fast is a leading entrepreneur, investor, public speaker and former contestant on The Apprentice.