Wealth For All: Why You Could Be Missing Out On The Potentially Life-Changing Benefits Of Investing

Recent research from Milford reveals what’s holding some women back from starting investing.

It’s a common theme. Perhaps you’ve considered investing but talked yourself out of it because you felt you didn’t know enough. Maybe you’ve dipped a toe in but worry you’re doing it wrong. Or you’ve delayed investing because you’re busy or waiting to see what the future will bring. However your investing journey looks, the research is clear: women are not as confident as men when it comes to investing their money.

Milford previously surveyed 3,800 members of its client base and found that despite women knowing they are capable investors, with 89 per cent feeling they are just as good as men at making good investment decisions, (numbers supported by broader industry data that shows women are just as successful with their investments), there is a 24 per cent gap in confidence levels. Just 64 per cent of women said they felt confident in investing, as opposed to 88 per cent of men.

The upshot for those feeling under-confident about their abilities and nervous about getting started is that they could be missing out on the potentially “transformational” lifestyle benefits that come with investing over a long-term period, says Milford’s Chief of Staff Sarah Mitchell.

“Logically there’s no gender difference [in ability] but when the rubber hits the road, something happens and women feel a lot less sure of themselves,” she says. “Personally, I do resonate with this. I know I’m capable of doing things but actually when it comes to doing it and putting myself out there, I often feel really vulnerable.”

As the mother of two girls, fostering financial literacy and making investing a welcoming proposition for all is a topic she’s passionate about. Everyone is an investor, she says, pointing to the fact most people have a KiwiSaver account; it’s not something for the elite or wealthy few.

Yet it’s no surprise women often feel intimidated to venture into the world of investing outside of what their bank may provide, she adds. Many have been brought up with their fathers taking care of the finances in the home, a pattern they’ve fallen into in their own households. This male skew is also reflected in the ways the industry has often alienated those unfamiliar with investing. Although things are shifting, as the industry works to encourage more women and younger people to engage with investing, there’s still room for improvement, says Sarah.

While a recent uptick of women’s wealth initiatives and events have the intention of closing the confidence gap, she says, it’s just as important to ensure these strategies are integrated by the industry into their everyday interactions with investors.

“If people don’t understand what’s going on, it runs the risk of actually turning them off investing because it’s not been the experience they wanted. It has to be integrated into normalcy so that people can be comfortable and confident in the service they’re getting.”

The Milford research also found that despite most people now regularly investing through KiwiSaver, alongside the rise in DIY investing platforms, plus a growing breadth of investing information available on social media and online, younger investors still regard the investment industry as ‘a man’s world’. Of those in the 18-34-year-old bracket, there is a 30 per cent difference in perceived knowledge of investing between men and women. That shrinks to a 22 per cent gap for those over 55.

It’s up to investment companies such as Milford to ensure everyone feels welcomed and engaged, says Sarah, something she acknowledges will take time.

“The reality is, the landscape’s changing, there’s a broad range of ages coming into the industry that we’ve never really seen before. So it’s really important for those who offer those services to be able to respond to that.”

Part of Milford’s strategy has been to demystify the process by ensuring their style of communication isn’t just targeted towards those familiar with investing, and to communicate with investors and potential investors through non-traditional formats, such as podcasts, webinars, social media and events, as well as collaborative and interactive environments where participants can talk to others and ask questions.

Just as women often apply for a job only if they’re completely qualified (as opposed to men, who tend to leap in even if they’re not fully qualified), you don’t necessarily need to know a lot about investing before you start, says Sarah.

“Pretty much no one knows everything before they start,” she says. “Investing doesn’t have to be risky or really scary or overwhelming. The beauty of using a fund manager and investing in a fund, rather than taking a DIY investment approach, is you don’t have to go and investigate all those companies. You don’t have to trawl through reports and understand their financial statements, what their declared strategy might mean for future cash flow.

“Incremental knowledge can grow over time. If you don’t get involved in investing, what you miss out on can be massive. The best time to start investing was yesterday, and today is a great back up.”

To find out more about investing at Milford, visit milfordasset.com

For helpful content on investing visit theinvestingplace.co.nz

This article does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Past performance is not a reliable indicator of future performance. Investment involves risk and returns can be negative as well as positive. Milford Funds Limited is the issuer of the Milford KiwiSaver Plan and Milford Investment Funds. Please read the relevant Milford Product Disclosure Statement at milfordasset.com. Before investing you may wish to seek financial advice. For more information about our financial advice services please visit milfordasset.com/getting-advice.