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Is the female investment knowledge gap real?

By Mike Narouei, Content Producer at Boring Money

2 May, 2018

The 'knowledge gap' is often wheeled out as a key reason women don't invest as much as men. The research, however, proves that often women actually do know as much about investing as the men do - they just perceive it differently. Is the knowledge gap all in our heads? We talk to Sarah Coles, from Hargreaves Lansdown, about how they've answered this question.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, confirmed that although women feel they don’t know enough about investing, oftentimes they actually do have what they need to get started.

Our research has found that the most common reason women give for not investing is a lack of knowledge. However, analysis of our clients found that women overwhelmingly have the knowledge they need in order to make sound investment decisions.

The second most common reason women give for not investing is that they don’t want to take too much risk. This works in their favour too, because they are less likely to invest in riskier assets, which makes their investments less volatile.

This echoes our research, with women citing risk, trust and a feeling of not knowing where to start as reasons not to invest.

Part of this comes from a skewed interpretation of ‘risk’. There is a sense that you can lose everything in the stock market. Stock markets are associated with risk, and in our day-to-day lives, that suggests imprudent or silly behaviour. Certainly, the stock market comes with some bumps along the way, but over an 18-year period, the authoritative and long-running Barclays Equity Gilt Study tells us that the probability that shares will outperform cash is 99% and over the last 10 years, you would have lost 1.3% per year in cash (because savings rates are below inflation).

But many women don’t see it like that. In a Mumsnet survey, one woman comments:

“I like my money to be secure, while my husband invests in the stock market. He likes the 'winning' element of shares but I'm a guaranteed returns person.”

But what is ‘guaranteed’ in the context of cash versus stock market, when the value of cash is constantly falling?

Savers’ behaviour over Junior ISAs ( is particularly revealing ( about our skewed interpretation of “risk”.If you start a Junior ISA at birth, you have at least 16 years to ride out the ebb and flow of the stock market. Yet treasury data confirms that 61% of Junior ISA subscriptions goes into … yes, cash. This is lower than it has been in previous years, but with interest rates at historic lows, this parking of long-term savings looks like “reckless caution” that could see your children's nest eggs fail to thrive.

Of course, your capital is at risk so you may get back less than you originally invested. The value of any investments and the income from them may fall as well as rise. This is what frightens people, but many over-estimate the risk that their investment will plunge to zero.

There is also a trust issue. Many would prefer to stick with their bank and find the whole fund management industry a bit complex and untrustworthy. But let us not forget - it was banks that caused the financial crisis, not fund managers. However, jargon is the most significant barrier to investing for both genders, particularly for women. 41% of them would be more likely to invest online if simple English was used.

Read next: Just how much better at investing are women? (