Cover Wealth With Sophia

Our first Wealth With Sophia column considers the gender wealth gap, what is holding women back and the role that financial education plays in wealth creation

Women are 51% of the world's population but hold only a third of the world's wealth ($93 trillion by 2023). This means that while women are the majority, they control a much smaller portion of the world's wealth.

Why is there still such a gap between men and women in creating wealth? Are we too busy doing the lion’s share of the daily household chores, budgeting, childcare and other related responsibilities to have the needed headspace to learn about and start investing? Do we face cultural barriers in how we’re taught and socialised to take on caregiving? Have we learned to treat money conversations as taboo? Do we just not talk about money in our social circles in the same way men do? And then there’s the gender pay gap.

But, is it all doom and gloom? What can we do to start to close the gender wealth gap? At Sophia, we believe that knowledge is power, and wealth creation is within reach. It’s time to talk about money.

Women and money today

Let’s put this plainly: women earn less than men, invest less and live longer. Women retire with only two-thirds of what men have at retirement. As a result, women are 80% more likely to be impoverished in retirement. How did we get here?

The biggest culprits: cultural barriers and the gender pay gap have certainly led us here. And caregiving expectations have a role to play too. But, ask yourself this: when was the last time you spoke with a female friend about their investment portfolio? In reality, women don’t talk about money as often or in the same way men do. In our experience, learning about money and creating communities of women learning together will give women the confidence to bring these traditionally taboo subjects to the forefront of the conversations we have with our girlfriends. 

What is holding women back?

Globally, just 28% of women feel confident about investing some of their money. Why are women not investing as much as men are? We don’t talk about money enough, sure. Do we have less income to invest because of the gender pay gap? Unfortunately, yes. But, there are other reasons that hold women back from investing too.

According to BNY Mellon IM’s research, if women invested at the same rate as men do, there would be at least an extra $3.22 trillion of assets under management from private individuals today. Studies show that women spend more time researching their investment choices and taking on more appropriate levels of risk with their investments than men do. According to Fidelity, women investors consistently outperform their male counterparts.

The research tells us that women are actually good investors, yet, we still invest less than men. This might be because investment services are primarily aimed at men. According to BNY Mellon IM, nearly 9 in 10 asset managers (86%) admit that their default investment customer is a man.

So, if women aren’t receiving the management services addressed to their needs, we have two difficult tasks ahead. Firstly, we need to demand greater inclusivity in financial services, and secondly and most importantly, be ahead of the game through financial education.

Data shows we are sensible and good with money. So what women need now is the knowledge and discipline to build long-term financial plans to grow and manage their wealth.

Change is underway

Younger women are more engaged with investing: 60% of women aged 18 to 30, for example, are open to investing or have invested in the past, compared with just 45% of women over 50. On the surface, this sounds good, but still, those 60% of 18-30-year-olds are largely not financially educated.

Asia is the fastest-growing hub of wealth creation for women, with a current growth rate of 10.4% per annum. This makes the need for financial education for women in the region critical. In this regular column for Front & Female, we hope to pique your interest to learn more, ignite your desire to grow your wealth and build a portfolio, share good money habits, and encourage you to take full control and responsibility of a financially healthy future. Stay tuned for more.

Tanya Rolfe is a co-founder of Sophia. She is also a co-founder of Harriet, which helps female founders fundraise capital, and host of The Money Makers Podcast, which interviews inspiring women in finance and female founders in Asia.

Front & Female’s Wealth With Sophia series is a collaboration with Sophia, a financial education platform built by women for women, to open up the conversation about money and help drive female financial literacy. The series covers all things money and investing to enable women to gain the confidence to take control of their wealth creation.

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