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How to overcome your investing fears

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Women make better investors than men.

Yes, you read that right. Although fewer women invest than men, research from Fidelity Investments shows women are 0.4% more successful in their investments than men.

Despite this, women are more cautious when it comes to investing. Women are diligent savers and more likely to have a cash ISA, as 5.03 million women only took out a cash ISA in 2019/20 – compared with 4.12 million men, Hargreaves Lansdown data shows.

Women typically live longer than men and earn less, so simply putting your well-deserved money into a savings account isn’t going to cut it.

So, what are you waiting for? It is time to start fulfilling your potential and build wealth. Investing is key to building long-term financial security, and the fact is you’re going to need your money to last longer.

Maike Currie, investment director for personal investing, Fidelity International says: “Yet again, women have proved to be prolific savers, consistently favouring cash savings over stocks and shares. However, this means many are missing out on the gains that could be made by investing in the stock market. All too often women see investing as ‘not for them’, and it is a challenge to our industry to ensure that women feel engaged and empowered to invest.”

On the bright side, research by Fidelity shows that one in ten (10%) female investors had started investing in the last year, while 14% started in the last 1-2 years, “an encouraging sign that women are beginning to consider investing and making their money work harder for them,” according to Currie.

© dowell – Getty Images overcome your investing fears

Investing fear is a real, genuine feeling for many of us when taking the plunge into the financial world. A lack of confidence and of knowledge are often cited as the reasons women don’t invest. Here are some practical answers to your investment fears, so why not start your investment journey now?

‘But it’s too scary!’

Got a pension? Then you’re already an investor! Legally, if you earn more than £10,000 a year, your employer must enrol you in a pension and pay into it – and pension money is in fact salted away in stocks and shares. So, if you’re nervous about investing, remember: you are already doing it.

YOU CAN DO IT!Earn free money by paying into a workplace pension, as you’ll get top-ups from both your employer and the taxman. If you’re self-employed or not working, consider opening a low-cost stakeholder pension. Even non-taxpayers can put up to £2,880 a year into a pension, and it will be topped up to £3,600 with tax relief.

If you want to go further, consider investing into a Self-Invested Personal Pension, known as a SIPP. This scheme can offer a much wider choice of investments, either decided by yourself, or with the help of a financial adviser.

‘I haven’t done enough research’

Women often hold back from investing because they are worried they do not have enough in-depth knowledge. But, according to Sarah Coles of Hargreaves Lansdown, “Our analysis shows that women who invest overwhelmingly have the knowledge they need to make sound investment decisions.”

YOU CAN DO IT!

For jargon-free information on investing, try Moneywise or Steps To Investing which provides a step-by-step guide. Sites such as Trustnet, Morningstar and the Association of Investment Companies provide information on specific funds – where experts manage your investment – and shares. Platforms like Plum, or Hargreaves Lansdown also offer apps, tools and research to make investing easier and more accessible.

Women-researching-investments

‘I have never invested before’

Women are increasingly financially independent – we earn our own money, manage family finances and recognise the importance of saving. We know what we want and work hard to get it.

YOU CAN DO IT!

If you want a helping hand, consider the ‘robo-advisers’, which are perfect for beginners. These online investment services, available from companies like Nutmeg, Wealthify, Moneybox, Moola and Moneyfarm, are low-cost and easy to use: you answer questions about your goals, how long you want to invest for and how much risk you are comfortable taking. The robo-adviser then picks a combination of investments and manages your money for you. Some allow you to invest from as little as £1.

Opening an account online only takes a few minutes and is easy to do. Watch out for dealing fees: expect to pay around 1% of your investment a year, including fees, to the robo-adviser and for the investments themselves.

As with any investment, the stock market can go up as well as down, and you could lose money. Check the Financial Conduct Authority’s website to ensure the company is regulated before you invest, as there are strict rules in place regarding how your money is handled to keep it safe.

‘Stocks and shares are too risky!’

While more women than men take advantage of cash ISAs, more men have taken out the investment version, according to Government figures. Just 10 per cent of women have a stocks and shares ISA, compared to 17 per cent of men, according to UK investment statistics. But, by staying in cash, women are losing out the value of their money, especially when inflation is soaring at a 40-year-high at 9% in the months leading to April.

“In a time of high inflation where cash savings are increasingly worth less in real terms, investing can be a powerful tool in your arsenal and you can invest as little as £25 a month,” says Maike Currie from Fidelity Personal Investing. “It’s promising to see a new generation prioritise saving and investing, standing them in good stead during these difficult economic times.”

YOU CAN DO IT!If you’ve never invested before, stocks and shares ISAs are a great way to start, because money inside one of these accounts grows without being taxed. Adults can stash up to £20,000 in the current tax year in a stocks and shares ISA.

Buying shares in individual companies can be risky because your returns depend on the success or failure of those specific firms. Instead, consider using funds, where your money is spread over lots of companies, countries and types of investment.

There are two main types of funds you can invest in:

  • managed funds, which are run by fund managers who work out the best investments for you
  • passive funds (also known as index-tracking funds), which are runby computers.

If you’re starting off, passive funds are the cheapest way to invest. Lots of financial service companies run index-tracking funds, including Legal & General, Fidelity, Vanguard, iShares and HSBC.

To help choosing, Moneywise has a list of first 50 funds for beginners. To avoid paying tax on your investments, tick the box that says you want it wrapped in an ISA when you’re setting up an investment. And don’t forget to keep an eye on fees, as these can really add up.

Plus, be proud of yourself for starting your investment journey, and for facing all those fears. It’s good to cherish your accomplishments, no matter how small.