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Markets rise and fall, seasons come and go, but one thing that seems to remain a constant is the gender investment gap. For years, it has been clear that women generally are more likely to save and less likely to invest than men.

According to a survey of 2,000 people commissioned by high-growth trading platform Capital.com in October 2021, when asked how they would invest £1,000, more women than men said they would save it (41% women vs 31% men) or invest it in an ISA (30% women vs 28% men). Despite women’s propensity to save, the same survey also revealed that just 29% of female respondents in the UK have traded or invested in stocks and shares online, compared to 47% of men. When asked why they were not interested in trading online, 58% of female respondents said they thought it was too risky, and 52% said they felt they did not know enough about online trading and investing.[1]

Such attitudes are not unique to the UK; they are echoed around the world. According to recent research by BNY Mellon, only one in 10 women globally felt they fully understood investing, while just 28% of women felt confident about investing their money. An eye-watering 45% of women viewed the stock market as too risky for them.[2]

All this might have resulted in a huge investment gap. BNY Mellon estimated that, if women invested at the same rate as men, there would be at least an extra $3.2 trillion of assets under management from private individuals today – larger than the GDP of the UK.

However, the situation may be changing. The onset of the COVID-19 pandemic may have unwittingly helped to close the gender gap. As more people were confined to their homes, DIY trading could have presented a possible way to supplement income and kill time.

What is perhaps even more notable is that while female investors are, on average, less active traders and investors, data shows that when they do participate in financial markets they are more disciplined and considered when it comes to investing and trading.

That may be, at least in part, down to different approaches to investing. A Capital.com analysis of the behaviour of around 2,000 traders for the 18 months to July 2021, showed that female investors use stop losses more often than men, with 43% of female traders using a stop-loss in more than half of their trades vs 35% of men. A stop-loss is often used as a risk management tool to limit losses.

Another noteworthy difference between the two groups was the amount of money being invested. Unsurprisingly, men tended to deposit larger sums. While 27% of females deposited more than $1,000, some 41% of males did the same.

“Ego is an issue in trading and the exuberance of the market coupled with a winning streak can make even an experienced investor feel almost invincible,” comments Arty Rusetski, head of artificial intelligence at Capital.com. “Our research shows that female investors do a lot of analysis and record keeping. They have a slight advantage here, because ego does not get in the way for them as much as for men. This has been demonstrated by the fact that women are generally more diligent as they tend to respect their stop losses more often.”

However, all traders can learn from the successes or failures of their peers. Building confidence via education is important to create a more inclusive and level playing field when it comes to trading and investing.

Laura Lin, chief executive officer APAC at Capital.com

“A big part of trading and investing is about building confidence through research, education, and learning. If you aren't fully informed, then you shouldn't trade,” says Laura Lin, chief executive officer APAC of Capital.com. “More needs to be done to support all types of investors when it comes to investing in stocks and shares and other asset classes with different risk reward profiles.”

To help people learn on the go, Capital.com offers a free learning app: Investmate. The app includes varied learning materials, 30+ courses and short lessons. People can also access free online courses, guides, webinars and analysis directly on the Capital.com website or go to Capital.com TV to improve their knowledge, develop their strategy and grow their understanding of how to analyse charts, news and other material information that may affect markets.

Such assistance may encourage more people to start investing and could yet help to close the gender investment gap.

For a full range of Capital.com’s free, online trading courses, visit here

Sources:
[1] https:/capital.com/more-than-half-of-women-in-the-uk-say-they-have-little-to-no-investment-or-trading-experience
[2] here

The Reuters editorial and news staff had no role in the production of this content. It was created by Reuters Plus, part of the commercial advertising group. To work with Reuters Plus, contact us here.

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