International Women’s Day, ISAs and Pensions – interactive investor publishes key customer stats

The gender savings gap is an important and well documented issue, but it is also an issue fraught with potential clichés around attitudes towards risk and reward.

Data by interactive investor, the UK’s second-largest direct to consumer platform, suggests that whilst fewer women invest, when they do, their risk profile is broadly similar to men. And the obvious answer to that, of course, is ‘well why shouldn’t it be?’ 

The issue is getting started – just 35% of interactive investor ISA customers are female and whilst the reasons for that will be varied, when it comes to the question of ‘pension or ISA’, some clear trends emerge.

Moira O’Neill, Head of Personal Finance, interactive investor, says: “Our customers tend to be highly engaged investors and because our flat fee structure is particularly well suited to larger pot sizes, that will be reflected in larger account sizes across the board. But even here, some thought-provoking trends emerge, with women showing a clear preference for ISAs over SIPPs, and men prioritising pensions. 

“Whether you invest through an ISA or a SIPP, the return will largely hinge on the success of your investment choices. But don’t underestimate the power of tax efficiency – it can make more impact over time compared to a fund that might have modestly outperformed its peers. Contributions to SIPPs are topped up by 20% by from the taxman (or woman). Higher and additional rate taxpayers can claim back a further 20% and 25% respectively which provides a further boost to returns.

“But ISAs are flexible, have easier access, and allow you to draw tax free income which doesn’t have to go on your tax return. Whilst women might be prioritising ISAs, it doesn’t mean they aren’t prioritising them with their retirement in mind. It’s good to use both.”

Analysis of interactive investor customer data reveals that while females make up 35% of ISA account holders, their average balance is £74,450 compared to £68,250 for men. But when it comes to Self-Invested Personal Pensions (SIPPs), men are clearly prioritising their pensions.

Just 26% of interactive investor SIPP customers are women with an average pot size of £125,938 compared to £228,612 for men.

Male customers invest an average of £2,308 a month into their SIPP through interactive investor’s free regular investing service, while women invest £1,492 – neither are small amounts, but the difference of almost £1,000 is thought provoking.

Men and women invest along similar lines

While it appears that fewer women invest than men, those who do invest along very similar lines to men. The exception is when it comes to investment trusts. These are very popular with interactive investor customers, but even more so amongst women, and this applies across ISAs, SIPPs, trading accounts, and millionaires through to non-millionaires.

Men are more inclined to invest in individual equities – by 6 percentage points more in ISAs and trading accounts, and by 3 percentage points in SIPPs.

Moira O’Neill, Head of Personal Finance, interactive investor, says:

“Fewer women invest than men, but when they do, our data suggests that their risk appetite is broadly similar. The issue is getting started. Interestingly, whilst our customers tend to be big fans of investment trusts, women are even more so. Given that investment trusts are often seen, on average, as being slightly more complicated (but don’t let that put you off!), with the potential for more volatility, this busts a few myths about women and their risk appetite. 

“It’s important that women (and men) do not rely on a life partner or spouse to fund their futures. So much can happen in your working lifetime of 30 to 40 years that you don’t know what situation you are going to be in when you are in your 60s. You can only rely on yourself. Even if you’re only investing relatively small amounts, say £25 a month, it has plenty of time to grow.”