Op-Ed: Closing the gender investment gap – empowering women in finance

Op-Ed: Closing the gender investment gap – empowering women in finance

In the realm of finance, there exists a pervasive and detrimental disparity known as the gender investment gap. 

This phenomenon refers to the discrepancy in investment patterns between men and women, wherein women tend to invest less compared to their male counterparts. This gap not only perpetuates gender inequality but also undermines women’s financial security and independence. 

A 2020 study by The Vanguard Group – an American investment advisor with $7.7 trillion in global assets under management – indicated that women spend less time investing than men, with 50 percent of women being less likely than men to trade actively.

However, in what was described as a post-pandemic silver lining, research conducted by Fidelity in 2023 showed that 60 percent of women were now active in trading on stock markets. 

The needle is moving globally, but are Bahamian women keeping pace?

Though Bahamian women have also made some strides toward closing the gap, it persists, nonetheless.

The most recent data on the matter indicated that women are 51 percent more likely to save for the long-term than their male counterparts (CBOB, 2019), however are less likely to take risks investing.

In 2021 a study compiled by online broker platform Broker Chooser, noted that women accounted for 36 percent of investors in The Bahamas. 

And while more Bahamian women commit to long-term savings solutions, men tend to commit more financial resources, which yield higher payouts in the long run.

 

Why women have less aggressive attitudes toward investing

One of the primary reasons behind the gender investment gap is the persistent gender stereotypes and societal expectations that shape women’s attitudes toward finance. 

From a young age, girls are often socialized to be risk-averse and prioritize saving over investing. 

To bridge this gap, concerted efforts are needed to empower women with financial literacy and confidence in investment opportunities. 

Providing accessible and tailored financial education programs that cater to women’s unique needs and preferences is essential. 

By equipping women with the necessary knowledge and skills to navigate the complexities of investing, we can empower them to make informed financial decisions and take control of their economic futures.

Wages also play a role in whether and how much women tend to invest.

In The Bahamas, women in managerial positions on average earn eight percent less than their male counterparts (BNSI Occupation and Wages in the Hospitality Sector, 2019). 

Lower earnings power and time spent out of the workforce to focus on family priorities are crucial factors to overall women’s overall attitude toward to long-term investment and savings plans.

 

How to close the gap  

Policy interventions also play a vital role in closing the gender investment gap. Governments and financial institutions can implement measures such as tax incentives for women investors, gender-sensitive investment products, and initiatives to promote women-owned businesses. 

By creating a more enabling environment for women to invest and access capital, we can level the playing field and unlock the full economic potential of women entrepreneurs and investors.

Closing the gender investment gap is not only a moral imperative but also a smart economic strategy. Studies have shown that increasing women’s participation in the economy can lead to higher productivity, greater innovation, and overall economic growth. 

By empowering women in finance and ensuring equal access to investment opportunities, we can build a more prosperous and equitable future for all. It’s time to dismantle the barriers that hold women back and create a financial landscape where everyone thrives equally.

 

Written by: CFAL Insights