Closing the Gender Investment Gap: 5 Strategies to Get Started

Let’s start with the good news: Women’s economic power is on the rise. Women have more financial decision-making power than ever before, as they now earn more, control more wealth, inherit more and start more businesses. As such, women will control nearly 50% of all financial wealth in Canada by 2026. These are important and impressive gains.

But there is more work to do to close the gender investment gap. As RBC’s Global Asset Management points out, just how many unique challenges women face to building wealth, including:

• Pay gap: Men still earn more than women. Notably, the wage gap is largest between Canadian-born men and immigrant women who landed as adults (21%) and Indigenous women (20%).

• Caregiver gap: Women in Canada provide more unpaid care for loved ones than men and they report more negative impacts on their well-being.

• Financing gap: Women business owners are less likely to be approved for short-term financing than their male counterparts and are also underrepresented in venture funding. 

• Investing gap: Women tend to place more importance on savings compared to men. When women do invest, they tend to seek out lower risk (and lower reward) investments.

• Retirement gap: When women are ready to retire, they often have saved only two-thirds of what men have saved. Yet, they must plan for a longer retirement, as women tend to outlive men by an average of four years.

These are sobering reminders that it is important to take steps to set yourself up for a secure financial future, particularly in an uncertain economy. It starts with seizing the opportunity. Currently, only 60% of women invest in the stock market, meaning four in 10 women are missing out on one of the best ways to build wealth. Yet women investors tend to outperform their male counterparts, as you’ll see.

Here are five strategies to help build your wealth if you’re new to investing.

Make a plan

Embrace being in the driver’s seat. The reality is, 95% of women will be their family’s primary financial decision maker at some point in their lives. This can happen at a variety of life stages—in your 20s, 30s, 40s, 50s, or your later years. It may happen by design, or it may happen when you least expect it.

Take time now to think about your own financial goals. Determine what you’re investing for—retirement, a home, education, travel—and your timeframe. This will guide your investment strategy and help you stay motivated over time. During an uncertain economic period like the current one, having a solid investing plan will be an anchor against the headwinds. 

Remember that it’s normal for some of your goals and aspirations to change over time, so find opportunities to assess what’s important to you at different stages of your life and make sure that your financial plan is still working for you.

Build your confidence

New investors can benefit from an abundance of resources to boost their financial know-how. First, get a handle on personal finance essentials to set a foundation for your investment plan. Take the time to learn the key financial terms. Then, consider one of RBC’s free investment seminars or practice accounts to deepen your knowledge.

If you’re nervous you don’t have what it takes to be a smart investor, keep this in mind: Research suggests that women may have an investing edge without even realizing it. In one study, women saw their investment portfolios grow 0.81% more on average than their male counterparts each year. If that performance continued for 30 years, women would end up with 25% more in their portfolios than men.

Start small (and start now)

As an investor, time is your greatest asset. Don’t wait until you have a large sum saved up to invest. Start small and make regular investments. This way, you’re not trying to time the market, and you’ll benefit from the power of compounding to earn even more. These small, regular contributions can make a big difference over time and they’re easy to do with a pre-authorized contribution (PAC) plan. If you assume a 5% return rate, saving $50 per month can turn into $3,400 in five years.

Play the long game

During times of economic volatility, it may be tempting to try to time the market or get out of investing altogether—but remember the old adage: It’s time in the market that’s more important than timing the market. 

Research shows women have an advantage in rocky markets: They tend to be patient investors who stick to their plans; they are more likely than men to have a diverse portfolio; and they carefully consider risk factors before making investment decisions. Women in one study were 50% less likely than men to suffer a loss of 30% or more.

Make it a team effort

Your investing journey doesn’t have to be a solo one. Across all backgrounds and income levels, Canadians who work with an advisor have been more successful at building wealth and achieving their goals than those who don’t. An advisor can help you determine the right financial products for your investment portfolio based on your unique goals and risk tolerance.

Ready to start your investing journey? Reach out to an RBC advisor today to ask questions, gain knowledge, and put together a plan that is right for you.

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