By Sarah Lewis
We speak to Michelle Pearce-Burke, co-founder of online investing platform Wealthify, and Klare Iveson, Aviva’s Head of Investment Marketing, on investing as a woman, understanding the lingo and how to manage your funds like a pro.
Stocks. Shares. Bonds. Confused? You’re not alone.
In fact, confusing financial jargon is cited as one of the reasons why few women invest 1. Despite often out-performing men when they do invest 2, research shows that many women lack confidence in what has, historically, been a man’s world.
But gender aside, investing can be a great way to make your money grow.
We spoke to the experts, to find out why investing is easier than you may think.
Michelle Pearce-Burke, co-founder of Wealthify
Hi Michelle, you founded online investing platform Wealthify aged 25. What got you into investing?
I became interested aged 9 by playing a free online game. The game was about pets but it had a virtual stock market. I spent all my time on it and quickly became super rich with pretend funds! It made me realise that investing could be a great way to make money and have fun too.
My parents helped me make my first real investment was when I was 11. I bought a small number of shares in a biotech company, but it didn’t perform well at all. That taught me that investing could also be risky and that it’s not a good idea to put all your eggs in one basket.
What do you wish more women knew about investing?
Although it’s sensible to have funds in a cash ISA or current account, over the long-term you’re not making the most of your money – you should consider investing some of it, too.
Our research shows that many women lack confidence when it comes to investing, but it’s not as complicated as you might think. Some modern investment platforms manage money for you so you don’t need much knowledge at all.
We also know that women are slightly more risk-averse than men, but investing isn’t necessarily as risky as you might think either. Most investing platforms will let you set a level of risk you’re comfortable with.
Back to basics. What’s investing? Isn’t it just another word for saving?
Not really! With savings you’re putting your money away, but with interest rates so low it’s probably not growing by much.
When you invest you’re buying shares (owning small parts of companies), bonds (loans to companies) or commodities (like gold or wine). You can also be an investor without realising it, for example when you buy assets like property. If you have a mortgage or a pension, that money’s invested in the financial markets too.
And what’s the difference between stocks, shares and equities?
I’m pleased you asked! It is confusing but, despite some minor differences, they all mean more or less the same thing. To keep things simple, we only refer to ‘shares’ on the Wealthify website.
If you have shares in Apple for example, you own a tiny part of it.
We have a handy glossary on the Wealthify website.
What’s a good investment platform for beginners?
It depends on your personal circumstances. Investment platforms like Wealthify are ideal for people with little knowledge of the stock market as a team of experts help choose the right mix of investments on your behalf.
Do I need to be mega-rich to start?
Not at all!
Our research shows that 40% of people don’t think they have enough money to invest, but that’s probably not true.
Some investment platforms like Wealthify let you start with as little as £1, but to make the most of an account you should ideally put in a little every month – whatever you can afford. Once you get used to how the markets rise and fall, you can always change your investment amount.
What’s the risk I’ll lose all my money?
Well, that depends. If you invest all your money in one high-risk stock like my 11-year-old self then yes, this could happen. But if you invest through a stocks and shares ISA, losing all of your money is unlikely.
Your investment would be spread between thousands of companies worldwide so you’d only lose everything if they all lost value at the same time.
It’s quite normal for the value of investments to go up and down, but I don’t think first-time investors should be put off. Evidence shows that over the long-term, money invested in stock markets outperforms regular savings – you just need to stick with it.
In fact, when the market takes a dip it can be good time to invest a bit more!
I’m concerned about where my money goes. Can I only invest in ethical companies?
Some investment platforms now offer ethical options, which invest in companies with high levels of corporate social responsibility and/or environmental standards.
Wealthify’s ethical fund avoids companies involved in gambling, pornography, weapons and the tobacco industry.
Can I start an investment account for children?
Absolutely. It’s madness to keep children’s savings sitting in cash, as you could get a poor return on a long-term investment. If inflation/cost of living is around 2% and your interest hovers around 1%, then you’re actually losing money!
When’s a good or bad time to invest?
There’s never a bad time. Some people have asked me if it’s a bad time to invest in the run-up to Brexit but, if you chose an investment platform that diversifies investments all over the world, we don't expect a huge impact .
Klare Iveson, Head of Investments Marketing at Aviva
Hi Klare, when did you become interested in investing?
I’ve worked in the investment sector since I left school. My first job was for a financial services company and I spent my day speaking to financial advisers and customers over the phone. I saw how investing could help them grow their money over time.
I then moved into marketing and this is where I started to understand that we need to do more as an industry to educate people about investing and make it simpler to understand.
Why do you think women are less likely to invest than men?
There are a few reasons – research shows that women tend to be more cautious with money than men. The idea that they are putting their money at risk or locking it away doesn’t land well. Providers are to blame too – we don’t always engage women when talking about investing and can neglect their concerns and fears.
It’s important to say that it’s not just women who aren’t investing though. Around 15 million people in the UK have cash savings but no investment accounts, so big numbers. As an industry we need to help customers get comfortable with the idea.
Where should I begin as an investing novice?
It’s worth doing some research before you start. I like financial advice website Boring Money, which explains things in a simple way.
If you’re cautious with your money, go with a brand you trust and start small. Most investing platforms let you start with a relatively low amount of money – Wealthify lets you start with £1 and Aviva’s own Stocks & Shares ISA at £50 – so start off low, contribute a little every month and get comfortable with investing.
Another thing to look out for is that you can invest with varying levels of risk, so you might want to choose a low risk investment to start with. Although many platforms let you choose your own funds (our stocks & shares ISA has around 2,000 to choose from) beginners might want to opt for a ‘ready-made’ package of funds that have been chosen by investment experts. These are often available on the same investment platforms as fund shortlists so you don’t have to wade through everything yourself.
Finally, check any fees before you commit. Some investment platforms and the underlying investment funds charge more than others.
What do you wish you’d known earlier?
Don’t forget to check on how your investments are performing regularly! I’m not advocating chopping and changing regularly or trying to time the market but make sure you know what you have and how it’s performing.
They say investing is for the long term. When is it too late to start?
I honestly believe it’s never too late – you should aim to have your investment for at least 3-5 years, which makes it an option for most people.
Any last words?
I have 3 tips to get started:
1. You don’t need to put all your money in at once. Invest a little each month.
2. Don’t forget, there are low-risk options available to suit your needs
3. Bear in mind your invested money isn’t locked away. Although it’s best to invest over the long-term, if you need your money sooner you can access it.
Finally, just get started – the sooner the better – don’t wait and don’t be put off! We spend most of our lives working hard for our money, we should make the most of it.
Managing your money
It's never too late to turn your finances around. Check out our articles and interviews to help you manage your finances this year.
Find out how the gender divide really affects your bank balance, meet the savvy women who are investing ethically, discover the money resolutions you’ll want to keep and learn why it’s not a good idea to stick your head in the financial sand.
*The value of your investment can go up as well as down and you could get back less than you invested.