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Harnessing your financial power – How are women investing their wealth?

It’s no secret that money is power. And right now, we are experiencing a shift in who controls that power, from both a cultural and economic perspective.

Powerful women across the world have been making things happen for a long time, it’s something we’ve experienced throughout history. But increasingly so, stepping firmly into the limelight, women are at the very forefront, leading the conversation and creating real, positive change.

From Greta Gerwig and Margot Robbie, responsible for last summer’s smash hit Barbie, Mary Earps taking on sportswear giant Nike when it refused to sell her goalkeeping kit, to the powerhouse that is Taylor Swift, whose Era’s Tour has been credited for boosting the economies of numerous cities she has played in. Swiftonomics looks like it is firmly here to stay, and she hasn’t even reached the UK yet. 

Globally, women hold 40% of wealth, a number that has been steadily increasing as societal and cultural norms shift. By 2025, 60% of Britain’s wealth will be in the hands of women, according to research from the Centre for Economic and Business Research.

But, for the increasing proportion of women taking on and managing wealth, the last few years have been a challenge, particularly with economic uncertainty, driven by global conflict and political change.

While the UK economy is finding a more stable footing again, with inflation dropping back and the prospect of interest rate cuts boosting markets, this change has impacted the way women manage their wealth. A factor we explored in greater detail in our latest research, where we surveyed over 350 high-net-worth women across the UK. 

Women have been rethinking their investment approach

Our research shows that women with over £500,000 in assets have made changes to where and how they hold their money. A significant 88% of women told us the economic environment has impacted their investment approach, with 43% reporting significant change.

Changing allocations

Where women hold their money, by asset, sector, industry, and geography, has evolved. The reasons for this are varied, but 32% of women told us they have changed their asset allocation as a result of the economic uncertainty. Some have altered their portfolio to take on more risk in a bid to achieve optimal returns (31%), while a similar proportion have reduced risk to preserve their wealth (29%).

Deciding what risk level you are comfortable with depends on your personal circumstances and stage of life. If you are nearing retirement and want to access the money you have saved, preserving your pension might be the best option, but women overall tend to be more risk averse when it comes to investing.

The latest HMRC figures on ISAs tell us that women are more likely to make use of this tax-efficient way of saving money. But are more likely to hold their money in a cash ISA, rather than opening themselves up to the potential upsides of a stocks & shares ISA. And research shows that it is the fear of risk that underlies this, alongside factors like awareness and a wider lack of confidence.

Diversifying

Almost three in ten (29%) women told us they had diversified their portfolio to spread their exposure to risk. And this ties in with women altering their asset allocation, investing in different stocks, assets, sectors and geographies, so even if one part of your portfolio isn’t performing as well, other parts might.  

Getting out all together

When the going gets tough, and your investments aren’t performing as you’d hoped, it can be tempting to look for where the grass is greener. A quarter (26%) of women told us they had come out of the market altogether, but this should come with a note of caution because it should all be about long-term goals. Getting out altogether leaves you potentially missing out when the markets turn. Instead, stay invested and make regular contributions to your portfolio and you could well benefit when the tide starts turning.

Freeing up other capital

The final change that women told us they had made was freeing up capital. And this is useful if you want to leave your money invested to ride out any market fluctuations. 24% of women have sold properties and 21% have sold a business.

If you want to build a portfolio that can navigate a changing market?

While the economic challenges of the last year have been unprecedented, it’s very true that none of us know exactly what is around the corner. It’s hard without a crystal ball.

This is why it is important for women, who are holding more and more wealth, to build portfolios that are resilient and can continue to power their financial futures.

And there are a few key principles. Always, before you do anything, build a pot of cash that can be accessed immediately to cover unexpected expenses and life events. And when it comes to your portfolio, set your goals so you have something to work towards, get comfortable with risk, and what that means for your money, manage this risk by diversifying your investments, and if you are lost or want some reassurance, speak to an adviser.

There has been so much positive change, and while there are still challenges to overcome, women taking hold and harnessing their financial power is only a positive thing. If you are in control of your finances, you are in control of your life.

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There is an important economic shift happening and at Independent Women, we are here to help women harness this. If you would speak to an adviser about your financial plans, please get in touch.  

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