The Gender Savings Gap: Men are more likely to invest in an Isa, while women opt for cash

Men are more likely to invest in Isas, while women prefer cash Isas especially in their younger years, new research finds.

About 35 percent of Isa investors in the 25 to 34 age group are women, and they never reach the same level as men, although this figure reaches 46 percent at retirement age.

Meanwhile, 45 percent of younger cash investors in Isa are male, and this share hardly changes as they get older, according to analysis of official data by AJ Bell.

The company points out that holding on to cash has a major impact on long-term wealth compared to investing, and the study echoes much other research showing that there is a significant gender gap in financial assets, such as pensions, in later life.

The main causes are already known: women are paid less than men, and they spend periods of their lives on essential but unpaid care work.

People are typically advised to save a rainy day fund of three to six months’ salary in an easily accessible Isa before starting to invest.

If you earn a lower salary, you’ll have to spend more on day-to-day bills, and you’re less likely to reach that point of relative financial security and invest later in life in an Isa or by putting in extra pension.

The age data below shows that women are increasingly likely to have an investing Isa as they get older, and therefore have had more time to save and acquire financial assets.

Meanwhile, new research from Standard Life finds that 26 percent of money earners are more likely to put extra money into their retirement, compared to 17 percent of women.

“There is no good reason why men should have more money than women, whether in savings, investments or retirement,” says Baroness Helena Morrissey, who leads AJ Bell’s Money Matters campaign to encourage women to invest to improve their financial situation. position.

Morrissey says factors that make women less likely to invest include the gender pay gap, and the financial impact of having children and menopause.

AJ Bell calculates that if someone kept the average Isa contribution of £8,690 a year in a cash account and yielded an average long-term cash Isas return of 1.13 per cent, they would have nearly £92,500 after ten years.

However, if they had invested the same contribution every year and had a return of 5 per cent per annum, they would have had almost £115,000 after ten years. That £22,000 gap widens to nearly £106,000 after 20 years.

This summer, the Department of Work and Pensions published the first official measure of the gender pension gap, which showed that women are reaching age 55 and have saved a third less in private pensions than men.

We’ve gathered tips from money experts on how women can maximize retirement – advice that men worried about a deficit can also benefit from – and see below too.