Mind The Gap: The Gender Investing Gap Is Costing Us

It's the gap that I think is even MORE important than the gender pay gap... and no, it's not the thigh gap. 

It's the investing gap. I'm sharing with you WHY it's so big, what it's costing us and how to close it.

And if you want to learn even more, head to: go.mswealthy.com/invest

xo
Simone

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I've spent the last five years learning from those brilliant minds in money, wealth, and investing. And now I'm part of a group of driven women who are changing the game and taking control. Don't know where to start. I get it. So join me and follow along. As I learn, apply and share the secrets towards more money, more investing and more freedom. My name is Simone, Martha Huggins, and welcome to ms. Wealthy's kiss my money podcast.

Okay. So I am not going to talk to you about something as menial and trivial as the thigh gap, but I'm also not going to talk to you about the gender pay gap by this point. I'm sure you've probably heard of that one. There's also something that's to me, I think bigger and more important than that, and that is the gender investing gap. Basically it means that women don't invest to the extent that men do and women don't invest as much as men do. So we have less women investing and all of the women that have missed, they invest less than men. And there are a bunch of reasons why we're in this place. And there are reasons that compound on top of each other that create more reasons. And it's almost like this vicious circle, but basically when I first started looking into this, when I first started training women on how to invest, I got really interested in why we have such a huge investing gap.

And why is it that women are more reluctant about the investing world and starting to invest? Why is it the women kind of more scared and afraid and worried about how to get started? Why is it that there's this lock up sometimes, most often, it's really just a mental block around being scared about investing, being worried about losing money, being really daunted and overwhelmed about the terminology and the complexity. And I say mental block because there was certainly not yet being a woman that isn't completely capable of investing. And I say mental book, because really it's there because I think the financial world seems daunting. It seems scary. It seems complex. But once you get to know how and how to get started, and once you understand really the terminology that isn't that complicated, it's just seems that way. Then all those blocks come down and there's really nothing that prevents women from investing.

So anyway, when I first started looking into our history and why we're in this place and how did we get here and what are all the things that compound on one another to kind of create this scenario that women think that they can't invest, or they think that they're not good enough, or they think that they just don't have the smarts or the intelligence to do it. When I first started researching, I found a number that it really blew my mind. I was so shocked and blown away and just stunned really. And it's a number in time. The time was 1974. So we're now in 2019, this is 45 years ago. And that's really not that long ago when you look at our history in time and our evolution and how long we've been on this earth, right? 45 years is not that long, but in 1974, that was the year that the equal credit opportunity act passed in the U S basically up until that point banks required single or widowed or divorced women to bring a man along to cosign any credit application, regardless of how much they earned and what the banks would also do would was discount the value of how much that woman earned by as much as 50%.

So up until 1974, women could not get their own credit out for the occasion, any loan whatsoever, whether it was for a house, a car, uh, you know, just alone to get an education, no credit application was allowed unless a man co-signed that application. And they discounted how much that wage was worth. So that basically they wouldn't lend them as much, um, as they would to men. And this genuinely shocked me. And I've got, I've got to say at this point, look, this is, I am not disparaging, and I'm not putting them down. This isn't about men versus women and one gender being better than the other. I'm literally just showing you, telling you our history and what has happened and how we've got to this point. So up until 45 years ago, women really, I would say, didn't have the same financial opportunities as men did.

And that has a massive effect on everything else. Even mentally like psychologically, there is a, a block and that doesn't come down immediately. As soon as the act is passed. I mean, look at where we are with the gender pay gap, just because we're aware of it doesn't mean that things have fundamentally change. We're not at equal pay the numbers. And fortunately for numbers, they don't lie. It's not about emotions or how we feel about something. It's literally the gender pay gap is a reality it's alive and kicking. And so when this happened 45 years ago, it meant that women then could open their own credit application. But I mean, if you think about it, I'm now approaching 35. So this was a reality for my mother and certainly a very, very, very real prominent reality for my grandmother. And you would be in the same position, even if at your age, your mother and your grandmother lived in a world where they did not have the same rights financially, even when it comes to bank accounts.

And so that has a trickle down effect because that dictates how our moms and how all grant moms reacted and thought about and related to money and credit and their financial future and related to how independent they were and could be legally. And so 45 years in the history about evolution really isn't that long. I don't think it's been long enough for us to say, yeah, we've completely turned things around because we learn and form our beliefs from those that raise us and from our parents, from the significant people in our life. And if those people meaning out moms and our grand moms, if they were the people that raised us and they were living in a world where they did not legally have the same rights as men, of course, that has a trickle down effect. Of course, they have beliefs around what they can do.

And of course that affects us because we absorb everything. We form our beliefs from everything around us, particularly as we're growing up. And so basically what's that what that has done is left a legacy. It's left this legacy where now we have a pretty major financial literacy gap, meaning women just a, not as literate as men when it comes to finances and money and particularly investing. Even when we look at the numbers of how many men work in the financial world, we're looking at like around 90% of men, even when it comes to like fund managers and portfolio managers, about 90% of men. And I definitely experienced this when I first became a stock trader. Uh, and really I was kind of seeing 95%, at least women. It was very hard to find a female trader. It's still very hard to find one. And they certainly just on not prominent.

So the world is the financial world specifically is built by men for men, because that has been a history. That's what our history and our legislation and government rulings and a law dictated. So of course that's left a legacy. We haven't evolved long enough for enough women to start entering that world more prominently because it just hasn't been that long. So the other legacy it's left is that women keep more in savings accounts instead of investing a large pot. Like I said, because of these mental blocks around how scary or orienting or complicated the investing world is, they think that keeping money in a savings account is safer. And yeah. Okay, sure. It's safer, but it's not doing anything for you. It's actually losing value. You're actually losing money, keeping your cash in a savings account rather than investing it. A large majority of women keep their money in savings accounts.

It's over 70% with the savings rates that we get. And then when you factor in inflation, your dollar is actually worse, worth less years later. So you're actually losing money instead of making money. So this is a really big pot, a really big reason of why women end up with less in that kind of end retirement accounts because women keep more in savings and more men contribute more into their investing. Women also start investing later than men. And so when you add all of these numbers up, starting later, less women investing less women investing less, it means that that compounds on each other. And if you don't know what compounding means, basically Albert Einstein cold compound interest, the most powerful force in the universe compounding basically means that every time you get a return on the money, you invest, you get returns on top of the returns, plus what you invested.

So say you invested a thousand dollars in the market, goes up 10%. You've just earned a hundred dollars. But if the market goes up again, 10%, which it history tells us it does, you went 10% on that return class, your original. And then every time it goes up again, UN 10% on that return, plus the return plus the return. And you kind of get the picture. So you do that again and again, over a long enough period of time, it is pretty insane. The curve that your fun does that your money does is really crazy. Compounding is genuinely like the eighth wonder of the world. It's insane. So we know the compounding matters, right? And we know that on average, certainly since 1928. So pretty long ago, the stock market has returned on average 9.5%. So when you're getting close to 10%, even with market dips and corrections and crashes, we know historically always rebounds, right.

Even when we had the 2007, 2008 historical crash, and that was yes, sure. A big one and rebounded, and certainly over the last a quarter, it's done insane returns for a lot of investors. So compounding is important. So why does all of this matter? And what is the point of talking about this? Basically, you need to invest that's, that's the end game, because as I've told you savings accounts, don't give you anything. If at all it loses money and that's not really not going to get you far enough ahead. So my point is why I'm telling you this is more women need to invest in. Women need to invest more, not just the number of women, but the amount that you invest, it's more important for us. And yes, the gender pay gap makes it harder for those that are in the percentages that are earning less than their male counterparts.

Yeah. It's harder because you don't get the same income. Therefore it's not as easy for you to say, therefore, you don't have as much to invest, but that's why it's even more important not to mention that women actually live longer than men. So if you still kind of sitting there thinking, yeah, but I don't think I can do it because I just, I don't feel like I'm smart enough or I can't work it out. Or maybe I'm just going to lose all my money. The other thing you need to know is that they've done the research and the verdict is in women actually make better investors. It's not by a lot. It's depending on the study, you read it's between half a percent to 1%. But again, if you take that percentage and you compound it year on year on year, and you use that percentage over off, what are your period?

That compounds to be a lot between 20 to 40%. And that's not compounding the returns year on year. So the proof is there women make better investors and it's for a whole range of reasons. Emotion comes into play. Uh, ego comes into play, but you need to know that as a woman, you don't inherently suck at it. We're built to be good at it. And this is why it brings me so much joy when I can train and teach women to invest. And when I can create a community around it, because there's no doubt that the financial world is built by men for men. And it's why it's often referred to as a boys club. And it's part of why it is also so daunting to women. I know that when I started as a trader, it was daunting. And even when I started investing, my first thought was never to do it myself.

But when I saw what I could do, when I saw what was actually possible, when I did it myself and not just the returns that I could achieve, but also really the feeling of independence and control that I felt and that I had, that was game changing for me. So that's why I do it. That's why I teach women, particularly because we need that community more. We need the women around us to normalize it and to really balance out what is a predominant male industry and a predominant male community with investing. So that's why I do it for women. And I have actually just been watching on a masterclass that answers a lot of questions that I get. In fact, I asked over a hundred women and each of them gave me three questions, their burning questions on what they had on investing. And most of the common questions were, how do I even start?

Where do I even begin? How much should I start with, how do I do it without risking everything and losing all of my money. So I created a masterclass around that and those questions. So if you want to learn more and if you want to come and watch it, it's totally free. Go to go.ms. wealthy.com/invest. Again, that's go.ms. wealthy.com/invest. And you can watch it, get the answers that you probably have around how to do it. And hopefully it starts to normalize it for you to hopefully it starts to create that fear and it strips out all of those doubts and concerns or worries, and the overwhelm and the confusion about the complexity. Because honestly it's not rocket science and it's already super rewarding for me when I teach women how to invest and I show them how to do it. And hopefully this gives you some insight and really starts breaking down those walls and those barriers so that you can start, and you can start in closing this investing gap because it's so important. And it's probably one of the most, if not the most important thing to me. And that's why I'm so passionate about bringing this to more women closing this investing gap. All right, beautiful. I hope you join in with me. And if I don't see you there, I will see you on the next episode.