Feb 24

Why women should invest in stocks and shares ISAs

Reading Time: 4 mins

Investing isnt just for men-folk! Women should invest too! Ladies are losing out on good money just by failing to put money into stocks and shares ISAs each year, according to the research company CoreData.

They’ve found that men are almost twice as likely to hold a stocks and shares (or ‘equities’) ISA than women (41% v 21.6%). This means, according to their research, that women are missing-out on returns on their average annual savings on £2,500 which could turn into £3,400 if they put that money into equities rather than savings accounts!

So, whether you’re male or female, now is the time to throw fear away and move from cash to shares for your ISA money. Here’s why and how.


How stocks and shares ISAs can make you a millionaire

moneymagpie_stock-marketThe asset managers, Brewin Dolphin, say that investing your ISA in equities could make you a millionaire. They say they already have 15 ‘NISA millionaire’ clients, whose ISA pots have broken the £1 million mark already and a further 40 have assets in Isas of well over £750,000.

Brewin Dolphin say these investors have two things in common: they invested directly in equities and they took some risks. However, they say that even people who invest conservatively in equity ISAs – if they put the full allowed amount in each year – could reach the million pound mark in less than 30 years.

They say: “with conservative assumptions on growth and income (5% combined) and inflation (2.5%), 2042 would see a total fund of £1,030,953 representing a gain of £522,180 on a total investment of £508,773. The total tax saving over this period would be an impressive £292,215 and a £1 million tax free fund for life.”

When you think that at the moment the FTSE is paying seven times as much income as bank deposits it looks even more daft to put your money into a cash ISA rather than an equities one!


So why aren’t more women investing in equities?

Mostly I think it’s fear – both for women and for men.

moneymagpie_stocks-shares-invest-equitiesIf we hear anything about the stock market it’s the fact that it has plunged wiping billions off the value of pensions etc. We don’t hear about it when it’s quietly climbing (which, by the way, it has been doing in the last few years). All we know of the stock market is that it’s volatile, scary and a sure way to lose money.

In the short-term, yes, all these things are true, if you don’t know what you’re doing (or sometimes even if you do).

But in the long-term these stomach-churning ups and downs smooth out and, on the whole, the general trend is upwards.

So if you’re putting money away for the long-term – and that’s the way you should view your ISA investments…as a long-term investment to form part of your retirement fund – then you need to put it into stocks and shares, not into savings accounts.

Savings accounts are for the short-term and they’re very useful for short-term saving and to be used as an essential buffer for day-to-day living.

However, they are USELESS for long-term investing because they don’t keep up with inflation – the returns, on average, are too low. For the long-term you need to invest in equities.

Personally I have never invested in a cash ISA because I see it as a waste of a tax savings vehicle (any money you put in a cash ISA you can’t put in a stocks and shares ISA). Here’s a video I did on that very subject a couple of years ago and I haven’t changed my view since.


How do I invest in equities ISAs?

It’s really easy if you just invest in a stocks and shares fund. I invest in index-tracking funds which are nice and easy, cheap and can come ‘ready-wrapped’ in a NISA too!

Here’s how stocks and shares beat cash ISAs and how to invest in them. In fact we have quite a few articles on investing in stocks and shares – and we will be doing more.

You can invest in individual shares too within a ISA. You get what is called a Self-select ISA, a type of investing ‘platform’ through which you can buy and sell shares within a ISA ‘wrapper’. We’ve got an article here about how to buy and sell shares so that will help if you would like to go this route.

However, if you’re just starting even to think about investing in an equities ISA you’re probably best going for an easy fund first and then move on to individual shares later when you’re happier about the whole process. Let me know how you get on!

Want to know more about what I think about shares? Follow me on Twitter for all sorts of facts and opinions!


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