Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
We have long suspected - OK, known - that we pay a penalty for being female, even when it comes to non-essentials. Painkillers marketed as being suitable for stomach cramps and hormone-related migraines have a higher price tag, despite the active ingredients being precisely the same as the standard version.
Women’s razors are more expensive than men’s. Even a biro with a pink cap costs more than the standard blue or black version. The so-called “pink tax” is a pretty name for something actually quite insidious. And the latest research carried out by Fidelity International shines an even brighter light on the inequalities between the sexes.
For once though, there is a positive twist for women. Because “thanks” to the pandemic, we had no choice but to give up our usual spending patterns. And what a difference it has made.
As many as 71% of women made an overall cutback in their spending since the first lockdown in March 2020. And the average net savings are impressive, coming in at £2,381. That is more than twice the amount saved by men, which averages £1,116.1
And guess what? It’s on those ‘pink tax’ products and services marketed specifically at women where we saved the most. All those trips to the hairdresser that we couldn’t make, saved us £352 on average, compared to just £37 for men. And the savings on clothes were almost as impressive - at £289 on average for women, compared to £123 for men.
And it doesn’t stop there. Women have saved more on days out with family and friends compared to men - £513 vs. £324 - this could be because they are the ones who are more likely to take children or other family members on days out.
Women also saved more in commuting (£261) and petrol (£265) over the past year, which could be down to not having to do the school run.
Women also saved more on drinks and snacks when out and about. The savings on coffee alone come to £71 over the past year for women, compared to £11 for men, and another £108 on shop-bought lunches compared to £63 for men. Although here, and also when it comes to savings on commuting costs, that could potentially be a negative positive, as possibly more of these women were furloughed than men.
However, lockdown wasn’t a one-way street to savings for women. We tend to have spent more on the weekly food shop (£197) and exercising at home (£97) during lockdown.
Men meanwhile spent more on streaming services (£88), purchasing apps or in-app purchases (£60) and takeaways (£57).
Whatever the reason why you made some savings, if you are fortunate enough to have come out of lockdown with a little more spare cash than you went in with, then now is the time to put these unexpected savings to good use.
And the start of the new tax year - or at least close to it as we still are now - is the perfect time to get started.
1. Make investing a positive habit
Adopting a regular savings habit is a good way to stay on track with your goals, and it has the additional benefit of taking advantage of the ups and downs in the market too. When markets fall you automatically benefit by getting more shares or units for your money. This is known as ‘cost averaging’ because it can considerably lower the average price you pay for your investments. And, if you buy when prices are low, you reap all the rewards when they rise again.
2. Don’t put all your eggs in one basket
Having a mix of assets from shares and funds to bonds and cash, across different sectors and geographies is the best way to ensure that one spell of volatility doesn’t take your entire portfolio down with it. After all, none of us knows what is around the corner. Spreading your assets means sharing the risks and that is essential for any investor.
3. Take an income or go for a snowball effect, it’s up to you
Company dividends are generally based on company performance; whether profits have grown, not whether the FTSE 100 is the flavour of the day. An additional benefit of opting for dividend-payers is that more often than not these also tend to be solid, global brands that typically operate globally, generating profits from a range of products and services across the globe, adding some additional diversification to your portfolio too.
If you don’t need the cash now, then reinvesting your returns and letting them grow and generate their own returns can transform your portfolio. This phenomenon, known as compounding and allegedly referred to as the eighth wonder of the world by Albert Einstein, has a powerful snowball effect and can substantially increase your total returns.
1 - Fidelity International, April 2021
Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.