Investing has traditionally been considered a man’s game with most traders, fund managers and even retail investors belonging to that gender.
The scene in Singapore is not much different. Saxo Markets, an online trading and investment specialist notes that less than 30% of its clients in Singapore are women.
A key reason for this is that women here and in several other countries are more likely to give up their jobs to focus on being a homemaker, says Maria Jelen, regional head of relationship management and sales trading for APAC at Saxo Markets.
“There are fewer women in the workforce, and those with a job tend to earn less than their male counterparts,” she adds.
While this gap has been on the downtrend, it stands at 6% in Singapore, and 37% globally, according to a 2017 survey by financial services firm Fidelity. “This directly impacts the amount of investable assets that women have if they have lower disposable income,” says Jelen.
She also points out weaker financial literacy as a factor hindering women from investing.
A recent report from the World Economic Forum (WEF) points out that the gender gap – relating to economic participation and opportunity – only closed up to 58% in 2021. While this is an improvement from the previous year’s statistics, the WEF estimates that it will take another 267 years for the gap to close at 100%.
Ironically, women are seen to be stronger savers than men. The same 2017 survey by Fidelity found that women save some 9% of their annual salary, a tad higher than the 8.6% average amongst men.
Even so, women’s savings are “not giving the most returns,” says Jelen.
As worrisome as these statistics are, she has been seeing a trend: more women taking an interest in global capital markets.
Saxo observes that its female investor base jumped by 410% in Singapore in 2020, compared to an increase of 307% amongst men. Globally, there was a 356% surge in female investors in 2020, compared to 288% for male investors.
Several investors entered the market amid the pandemic to reap the opportunities it presented. “I think investing became more common,” mulls Jelen, adding that more investment solutions have been created to attract women.
These include solutions focused on values such as ESG (Environment, Social and Governance), regular savings plans as well as online solutions for novice investors. Other popular products are long-term investment instruments such as ETFs (Exchange Traded Funds), shares and mutual funds.
Female investors are typically drawn to products that resonate with their values, interests and the causes they care about, observes Jelen. She adds that they also have a liking for products that do not require them to constantly watch the market.
Having said this, Jelen says that there is no one-size-fits-all product as a sizable number of female investors actively trade more volatile products like Forex, CFD indices and crypto currencies.
In a bid to encourage more women to invest, Saxo Markets has come up with the Close the Gender Gap referral programme.
As part of this, female clients of the platform can earn $750 if a female friend they refer funds her account with at least $100,000.
The friend will also need to make three qualifying trades or open a Regular Savings Plan (RSP) sub-account. In exchange, the friend will receive $250.
Meanwhile, clients whose friends fund their account with at least $3,000, make three qualifying trades or open an RSP sub-account, will receive $250. The friend joining the platform will be credited $100.
Clients who refer their friends can also unlock rewards such as books, spa treatments, visits to attractions and shopping vouchers.
Aside from these incentives, they will have access to services such as expert insights, low fees and a quick online account opening process.
“Closing the gender investment gap is critical for the overall financial wellbeing of women, especially as women, on average, live longer, save more and yet earn less and invest less,” says Jelen on the intent of the programme.
On a personal level, she believes that investing will give women greater freedom to live the life they want.
Jelen breaks this down with the example of saving up for retirement.
A person who saves $500 every month at a per annum interest rate of 2%, would have accumulated $145,000 at the end of 20 years.
However, investing $500 a month at a compound rate of 8% per annum can yield $274,000 at the end of 20 years.
A 2% return realistically represents a low risk bond or cash portfolio, while instruments with a return of 8% realistically include a mixed equity/bond portfolio that is overweight on equities.
Jelen also points out that one would need to save more per month if they want to reach their financial goals in a shorter amount of time.
For instance, a parent saving up for his/her child to pursue a five-year medical degree programme at the National University of Singapore (NUS) would need about $195,000, after taking into account an annual inflation rate of 2%.
To hit this amount, he/she would need to save $940 a month for 15 years at an interest rate of 2% per annum.
On the flip side, the amount of capital needed will only be $600 per month, if it is invested at a rate of 8% per annum over the same 15-year period.
“Investing, even a small amount, can over time give you more options for rainy days and to have more buffer,” stresses Jelen.
Addressing women who may be afraid to start investing, Jelen says it is important for them to determine their investment objective and time horizon, so they can come up with a sound investment plan that they will stick with.
For instance, the focus for long-term investors is their time in the market. What this means is they should ignore the day-to-day noise in the market and see through their investment plan.
To gain a better understanding of how investing works, Jelen suggests that investors can open a demo account to play around and search for investment opportunities. Users can also see how to place orders and how account values change with market movements.
“It’s a safe environment since there is no real money at stake so you can be curious and click around. Then move on to open a real account and if you still feel you need more assurance then start by investing a smaller amount and grow from there, based on your comfort level,” quips Jelen.
Cover image: The Edge Singapore
