Invest Like a Girl

Thanks to the courageous, determined struggles of several generations of women, women have broken free of their confinement to the kitchen. In most places around the world, women have equal voting rights, can file for a divorce and have access to safe contraception. Women are choosing to pursue careers in academics, medicine or owning their own businesses in higher numbers than before.

Despite these encouraging changes, however, women are more likely than men to fall below the poverty line at some point in their life, and because of low wages, women have less overall social mobility than men. The average woman makes 23 percent less than the average man, and at current rates of progress, women will have to wait 170 years before women and men get paid equally.

Even more extreme than the wage gap is the wealth gap between women and men. In terms of wages, a single woman makes about 80 cents on the dollar compared  to their male counterparts, but in terms of wealth, women have 32 cents on the dollar -- a much more concerning statistic.

According to JP Morgan Chase, “[while] wealth is the difference between a person’s assets and liabilities, our real-life experiences with wealth mean so much more. Wealth is the ability to pay for an emergency or other unexpected expense, the freedom to buy a home or pursue higher education, the security of saving for retirement. In short, wealth offers stability and opportunity.” Wealth can be the difference between escaping an unhealthy relationship or staying in it, pursuing dream, or being able to pay for preventive medical care.

The three big factors that lead to women’s high poverty rates are that they are unable to get into highly-skilled, highly-paid career paths, and they spend a large amount of their time, money and energy on family versus a career, and women typically do not plan for their financial future by investing. Most of us are very aware of the first two of these factors; it is difficult to make it out of a low-paying “pink-collar” job like waitressing, teaching or child-care into highly-valued business or tech jobs, and the reality that having and caring for children lowers her peak career income. Looking at the wealth divide across a lifetime, we notice that the gap initially widens between ages 18 and 24 (20.6% female poverty versus 14.0% male poverty) and that it narrows gradually across the productive career years and then worsens again in old age.

Not only are young women in their fertile child-bearing years between 18 and 24, but this period is also a time when one would be in college, establishing a career and putting aside money to invest. Women are often confident with the tasks of paying bills and budgeting, but less confident investing. Only 52 percent of women  say that they are confident with investing, compared with 68 percent of men. Young women in particular are poorly-prepared to invest with a 47 percent confidence rate measured for millennial women.

This lack of confidence in financial planning begins in  the home where girls are so often told how to save money while boys are taught the value of more risky, though rewarding, investments. This is one of the key reasons why young women tend to prefer savings accounts over investment accounts; they see the stock market as too risky. Unfortunately all this lack of investment in stocks adds up to a huge deficit in wealth over time for women, meaning that by retirement age they are less prepared, as shown high poverty-rates in retirement.

The reality is that  danger of not investing your money is even greater than the risk of investing. From 1966 to 2015, the average return on investment has been 5.38 percent according to In real terms, if you had invested $5,000 when you were 20, and added $1,071 per year for the next 30 years, you would be comfortable now with about $100,000. Because the stock market does fluctuate though, there is no real way to know if this rate of return will continue in the next 30 years, but looking at past trends, it is a good bet that it will.

You might be enthusiastic to try investing for the first time, but worry that you need to be very wealthy to invest. Fortunately, there are several apps that allow novice investors to trade on the stock market for little or nothing. The most popular of these is RobinHood which allows you to invest in a wide variety of stocks for free or a low monthly subscription. WiseBanyan also lets users trade for free, but has a more narrow focus on ETFs (a relatively-safe investment). Acorns invests spare change by rounding up your purchases and automatically buying stabile investments like Vanguard ETFs and iShares. Acorns charges users a $1 per month fee.

These apps make investing more fun and automatic-decreasing the intimidation-factor of investing in stocks. So get out there, women, and break yet another glass ceiling -- that of women’s right to wealth!