How social trading could help narrow the gender wealth gap

“If you want to lift up humanity, empower women. It is the most comprehensive, pervasive, high-leverage investment you can make in human beings… When we invest in women and girls, we are investing in the people who invest in everyone else.”
— Melinda Gates

It’s not news that men retain a significant financial advantage over women. What is surprising is that it remains so when women make up close to half (47.7%) of the global workforce,1 and sometimes more in Western countries.

Part of the gender wealth gap is certainly attributable to women’s lower wages. But reducing the gap by focusing on equal pay would take a very long time (in 2018, the World Economic Forum’s estimate2 was that more than 100 years would be needed to close the wage gap in most of the Western world) and, furthermore, more women need to be welcomed into higher-paying positions and industries for the average female income to more closely match men’s. These factors are, unfortunately, not in a woman’s own control. Through harnessing the power of investing, however, women are in a much better position to close the wealth gap for themselves. Women make less money than men but, statistically, earn more when they invest that money.3

The problem is, not many women are investing. A recent study4 found that only 23% of women take charge of their own long-term financial decisions.

There are many possible reasons for this, but it still seems as though now, in the year 2020, one would expect that number to be a lot higher. Discussing barriers to investing with a friend, I realised that my own greatest obstacle was not a lack of confidence in my potential to learn how to invest for myself, but a lack of “mental space” to do so. Juggling home and work responsibilities is certainly, if gradually, becoming more of a shared burden between men and women. But research shows that even when men take an equal part in childrearing and household duties, it is still women who shoulder primary responsibility for the planning, organising, and delegating of said duties. In fact, the same study above found that 85% of women do take charge of day-to-day financial decisions.

This household management — what needs to be done and when, who needs to be where, and the logistics of how to make it all happen — requires a lot of mental focus, which inevitably comes at the expense of other matters. There is only so much mental energy a person has in a day and, typically, the urgent (someone needs to buy toilet paper) ends up trumping the important (someone needs to take care of our financial future).

There is even a term for this phenomenon: the mental load. Both men and women have plenty of things that occupy their minds, but women’s are more likely to be filled to capacity with the immediate and never-ending needs of a household. This is true even when the actual labour is divided equally, and more so when children enter the equation — and it has far-reaching implications for less immediate, yet vital concerns such as making investment decisions which will impact her financial future further down the line. Most women would agree that this is important to focus on, yet, only a small percentage actually do so.

So, how can women who want to invest do so without feeling like it’s just one more thing on an endless to-do list demanding their attention? Putting your money in the hands of a financial advisor is, of course, an option. However, you might want to consider social trading, and more specifically copy trading, which is online investing by copying what other successful investors are doing. On the one hand, it is empowering because it allows you full control over your own portfolio management, rather than giving that control over to someone else; but, at the same time you can lean on the expertise of experienced investors and have the advantage of a supportive trading community.

There are many ways in which copy trading might prove to be a better fit for women:

It’s friendlier. Whereas traditional financial institutions are exclusionary, copy trading is social and by nature inclusive. People from all walks of life and from all over the world are encouraged to share their investment strategies and their portfolios. Rather than being made to feel “out of your element” or intimidated, the experience is user-friendly and everyone is equally respected and welcome.

It’s simpler. There is no simpler way to get started investing than with eToro’s CopyTrader. Choose from hundreds of vetted, experienced investors and just click “Copy” to replicate their trades automatically. You are still the one in complete control of your investment, with 24/7 online access to your own portfolio. You can stop, pause or change the amount invested in the copy at any time you wish.

It’s more transparent. eToro’s Popular Investors are actually investing their own capital, making them more personally accountable and literally invested in helping you profit too. Their past performance, as well as current holdings, are completely transparent and viewable on their profiles.

It’s more accessible. You can open an eToro account online in minutes and start copying investors with just a small amount of capital ($200). There are no additional fees charged for copy trading on eToro and no ticketing or management fees that traditional brokers often charge.

You can take it for a test drive. Want to try CopyTrader without risking any capital? Try it in demo mode. Every eToro account includes a free $100,000 virtual portfolio for you to practise with.

You can read more about eToro’s CopyTrader feature here. Ready to start copy trading? Discover investors to copy on the platform here. Let’s leverage the social trading revolution, and the way it empowers people by making investing simpler, to start closing the gender wealth gap.

Sources:

  1. https://www.catalyst.org/research/women-in-the-workforce-global/
  2. The Global Gender Gap Report 2018, World Economic Forum. http://www3.weforum.org/docs/WEF_GGGR_2018.pdf
  3. https://www.wbs.ac.uk/news/are-women-better-investors-than-men/
  4. https://www.ubs.com/global/en/media/display-page-ndp//en-20190306-study-reveals-multi-generational-problem.html

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