Research shows women are behind in all areas of savings and investing – largely due to the gender pay gap, which turns into a gender investing gap. If you’re earning less, there’s less going into your KiwiSaver account. And that can lead to having less money in retirement, especially when you don’t get the full effects of compounding interest. And women who divorce often do worse than their partners after an expensive relationship split, data shows. So, what’s stopping women from reaching their financial goals and being on the same financial page as men?

Gender pay gap

Statistics New Zealand says the gender pay gap is 9.3 per cent. Women’s median hourly earnings were $24.50, and men’s were $27. “We make less on average,” says Ayesha Scott, a senior lecturer at AUT’s finance department. “We’re often out of the workforce [with children]. So, we won’t catch up over our career when it comes to the gender pay gap.” Gillian Boyes, investor capability manager at the Financial Markets Authority (FMA), the investment industry watchdog, agrees. “Female-dominated professions tend to earn less, and despite all our efforts, women are still under-represented in those high-earning, top leadership roles.”

Lower KiwiSaver balances

Earning less means you’ll probably have less in your KiwiSaver too. The split of men and women enrolled in KiwiSaver is roughly half, but women’s balances are usually lower than men’s. ANZ research showed that eight years into KiwiSaver, average balances for women members of the ANZ KiwiSaver Scheme were almost 28 per cent lower than men. The bank estimated in its 2015 research that women were likely to retire with NZ$60,000 less than men (NZ$144,000 for women and NZ$203,000 for men). Add to that the fact that many women outlive their partners, and those savings need to last a lot longer.

Lack of investing confidence

The latest research from the FMA shows 65 per cent of men surveyed were ‘fairly confident’ or ‘very confident’ in investing, compared to 57 per cent of women. “Many women don’t invest because they fear their lack of knowledge,” says Boyes. Most financial advisers and other professionals in the investment space are men. And the jargon and complex language used by many advisers may make some women may feel alienated.

So, where do women start?

Alexandra Lipski, of social enterprise Closing the Gap, says index funds can be a good place to start investing, because you don’t need to do research on individual companies. “As you build knowledge and confidence, look at other options. View it as a scale, or a journey, and you can stop at the point you want.”

More conservative choices

Scott says when it comes to investing, research shows men tend to overstate their ability and go for more risky investments. “Women tend to be more risk-averse than men, perhaps not taking the risks they should be taking. “Women are less likely to invest in riskier asset classes like shares, and less likely to invest their KiwiSaver money in the higher risk classes. “But research shows that once females do start investing, and they take appropriate risks, they tend to outperform men.”

Taking time off for family

It’s common for women who have children to take time out from work. They might return to part-time work to spend more time with family, giving them poorer financial outcomes. “Women have more disrupted careers,” says personal finance writer Susan Edmunds. “And if you have less money overall, you have less money to invest.”

What can you do?

But it’s not all doom and gloom. Experts have some solutions on how to get comfortable with investing and make positive changes to your finances.

Check in with your KiwiSaver: “If you’re in KiwiSaver, you’re an investor,” says the FMA’s Gillian Boyes. “Engage with your KiwiSaver account and make sure you’re in the right fund for your timeframe and risk levels.”

Start investing early: “Start as soon as possible. Start before you get into having children, as it’s easier to carry on through that. But any time is better to start, than just waiting,” says Edmunds. Time is your friend when it comes to investing, as your returns can compound over the long term.

Aim high at work: Get confident when it comes to pay negotiations. If you’re applying for a new job, negotiate hard. There’s never a better time to make up for lost ground.

Balance out the balances: If you’re in a relationship, ask your partner to contribute to your KiwiSaver account if you’re off work while having children. This can help build your balance, even when you’re not earning.

Learn by doing: All experts we spoke to agree the best way to learn about investing is to start with a small amount. Plenty of new platforms offer easy ways to invest money, and you don’t need to be a millionaire to start.

Prepare for the worst: Many women end up financially worse off after a relationship split or death of a partner. Learn how the finances work in your household, so you’re not caught out. If you have significant assets you want to protect in a relationship split, speak to a lawyer.

Start the conversation: Join online groups and forums. Form networks with fellow beginner investors. LinkedIn is a valuable networking platform for those interested in finance, business, and investing. “We know from our research that one of the most effective things in building women’s financial capability is learning alongside other women. Don’t be afraid to ask questions,” Boyes says.

Published 25 November 2019

This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.