There are clear gender differences when it comes to saving and investing: women save, men invest.
According to an article in The Independent last year, 62% of women have savings accounts as opposed to only 55% of men. But when it comes to investing in things like stocks and shares, 23% of men invest, while only 11% of women do. Investing is more of a risk, but if you get it right the rewards can be much greater. What’s stopping women from maximising the opportunities to make their money work harder?
Willingness to invest in Junior ISAs for children
The one area where women are more prepared to invest is not for themselves, but for their children, and the investment vehicle that many choose, is the Junior Individual Saving Account, or JISA, for short.
There are two types of JISA – the cash JISA and the Stocks and Shares JISA. With the cash option, any interest the sum deposited accrues, is tax-free. With the stocks and shares option, any capital growth or dividends accumulated are also, tax-free.
When mums and dads open JISAs for their children, it is the children who own the accounts. Parents are not able to withdraw anything at all. The funds in the JISA, whether they are in the form of cash or stocks and shares, cannot be accessed by the named child under normal circumstances, until his or her 18th birthday.
The rules regarding Junior ISAs
Parents can open JISAs for their children up to the age of 17, but when children reaches its 16th or 17th birthday, they, themselves, can open their own JISAs.
Any child can have one Cash JISA and one Stocks and Shares JISA. The maximum that can be deposited in any combination of JISAs, in any one tax year, is £4,128. If the named account holder does not withdraw the cash on his/her 18th birthday, the Junior ISA automatically changes into an Adult ISA.
Junior Cash ISAs are considered to be very safe. Junior Stocks and Shares ISAs do carry an element of risk. It’s because the value of stocks and shares rise and fall on a daily basis, according to the state of the world economy and contemporary trends. It means that investment values can go down as well as up.
Long term investments for children
The option of going cash or stocks and shares on Junior ISAs doesn’t seem to trouble women as much as when the decision concerns their own ISAs. Perhaps it’s the realisation that long term investments in stocks and shares are less likely to fall foul of shorter term trends.
Lack of time
One thing that is true is that women tend to have far less free time than their male counterparts. Women still bear the brunt of family household chores and childcare. That leaves less time to ponder things like investment risk potential and the yearly tax-free incentives that both Cash and Stocks and Share ISAs offer.
Traditional financial institutions, like banks, don’t help. More often than not they make investing appear complicated, difficult and time-consuming.
New Investment platforms bring better investment clarity
However, that could be a thing of the past. The financial services industry is being disrupted by the launch of a new generation of investment platforms. They bring with them a whole new world of free and transparent information. It is easier than ever to evaluate investment growth potential, and investment risk. It’s an empowering approach that might just overturn the barriers to investment for a growing number of women.