Why More Money Needs to Be in The Hands of Women
by Verve Money
Want to know one of the answers to tearing down the barriers that block women’s progress worldwide?
It’s simple: Get more money in the hands of women!
Women are agents of change in their families, communities and countries. The OECD has stated that women’s economic participation and ownership and control of productive assets can speed up development, help overcome poverty, reduce inequalities and improve children’s nutrition, health and school attendance.
What women do with their money.
Women invest money back into their families and community
Women typically invest a higher proportion of their earnings in their families and communities than men. Research1 by Claire Costello, Managing Director of Philanthropic Solutions at Bank of America, and Jackie VanderBrug, Head of Sustainable and Impact Investment Strategy in the Chief Investment Office for Merrill and Bank of America Private Bank, found that women invest about 90% of their income back into their family. By comparison, men typically invest around 44% of their income back into their families.
Women invest with a long-term view
Research2 shows that women make good investors. A big reason behind this is the long-term goal-centred approach women take in their investment strategy. Women generally invest for a purpose, whether it’s to improve their and their family’s lives or invest ethically for a better world. Women tend to invest with long-term purpose-led goals rather than, say, trade shares as a game.
Women have a focus on giving
In the study by Costello and VanderBrug1, the researchers found that women generally want to use their money for good. Not that this is incredibly surprising, as most women we know and work with feel the same way, fueled by good intention – women with wealth have the power and opportunity to make an impact around the world.
The three examples above show that women are generally more altruistic and generous with their money than their male counterparts, with a higher tendency to donate their money and volunteer their time, reinvesting a large proportion of their income back into their families for nutrition, education, healthcare and more.
These findings suggest that women recognise that reinvesting back into the family creates more sustainability not only within the family unit, but within the community and society at large.
This same outward view ethos is becoming more prominent in the ESG investment space also.
The study, From Values to Riches 2022: Charting consumer demand for responsible investing in Australia, found that Australians are becoming more serious about aligning their money with their morals, with three-quarters (74%) of those surveyed confirming that they would consider moving to another provider if they found out their money was being invested in companies engaged in activities inconsistent with their values.
“Australians demand more transparency from their providers, with 75% wanting to know which companies their super fund, bank or other investments are invested in.”
And women are leading this charge. A recent RBC Wealth Management study of U.S.-based clients found that “female clients are almost twice as likely as their male counterparts to say it is important that the companies they invest in integrate ESG factors into their policies and decisions….[and are] more likely to prioritise ESG impact when considering what companies or funds to invest in”.
Women invest in the well-being of women
In the research phase of developing Verve’s Gender Equality Index, Verve found that 96% of our super members considered it essential they invest in companies creating a good workplace for women. This demonstrates that women want to know that companies are addressing gender inequality, whether it is to do with gender pay parity, anti-sexual harassment & workplace safety policies and practices, formal commitments to drive change, inclusivity & flexible workplace practices, promotion of women into leadership or paid parental leave.
Interestingly, Verve also found research that supports the concept that diversity is the key to improving team performance, decision making and higher profitability. According to research by McKinsey & Company, the most diverse companies outperform their less diverse peers by 36% in profitability.
Altruism aside, women make good investors
If female investors have any weakness, it’s their mistaken belief that they are not good investors. The recent Fidelity 2021 Women and Investing Study found that only one-third of women surveyed see themselves as investors, meaning only 33% felt confident in their ability to make investment decisions.
We must build confidence in women to see themselves as investors.
Perhaps women are just more modest in their abilities?
The same study found that women lacked confidence in investing, also found that female investors generally capture stronger rates of return than their male counterparts. This study reported that over a 10-year period, women received an investment return that was 40 basis points, or 0.4% per annum, on average higher than that received by men. While this might not seem like a lot on a one-year basis, it can translate into thousands of dollars over time, thanks to the benefits of compounding.
Many finance experts and analysts agree that women typically display traits that may inherently make them good investors. At the risk of sounding like we are stereotyping — we know that everyone is different; generally speaking, female investors are often:
- Good savers: Women tend to save more and are more disciplined in their saving habits.
- Diligent in research: Women may not be as confident about investing, but this means they tend to do more research to understand the risks before making an investment decision, are more likely to ask for advice from experts and are less likely to make impulsive investment decisions. (Impulse spending decisions are a different thing.)
- Responsible risk-takers: Women tend to choose lower-risk investments more likely to provide a relatively “safer” return.
- Disciplined: Women tend to follow the rules on trading and investing and will usually adhere to their plans and not change them abruptly.
- Patient and nurturing: Women investors tend to have more patience and take a longer-term view, and are more likely to be willing to give an investment the time it needs to perform well.
If we are to believe that we get the future we invest in, then it’s time that more women have access to wealth to invest in the future that they wish to create.
How to shift money into women’s hands
For women to make change with their money, they need access to the full range of credit, banking and financial services and facilities essential to more fully develop their assets, land and businesses.
This is one of the many reasons we’ve launched Verve Money – to increase the level of wealth that women have access to and can share.
We believe that increasing the level of wealth held by women globally will benefit and advance both women and men globally.
At Verve Money, we’re on a mission to get wealth in the hands of more women. We believe it’s a great thing for them, their families, their communities, the environment and the planet!
1 – How Women Give—and Invest—for Change, Claire Costello, Managing Director of Philanthropic Solutions at Bank of America, and Jackie VanderBrug, Head of Sustainable and Impact Investment Strategy in the Chief Investment Office for Merrill and Bank of America Private Bank.
This article is published by Verve Money Pty Ltd (ABN 71 653 669 366, AFS Representative No. 001294184), a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956; AFSL 238184), as the Manager of Verve Money. A friendly reminder that all the financial information contained in this article is general in nature and does not take into account your personal financial objectives, situation or needs. It’s important to do your own research and consider getting in touch with a professional adviser to access specific information tailored to your unique situation.
You should read the Product Disclosure Statement, Investment Guide, Target Market Determination and Financial Services Guide before making a decision to acquire, hold, or continue to hold, an interest in the Verve Money Fund. Visit www.vervemoney.com.au/documents to view these documents.
Interests in the Verve Money Fund (ARSN 662 622 899) are issued by Melbourne Securities Corporation Limited (ACN 160 326 545, AFSL 428289). When considering financial returns, return of capital is not guaranteed and past performance is not indicative of future performance.