Women continue to ‘overinvest’ in cash ISAs, threatening to miss out on valuable returns in the long term, an adviser has warned.
According to analysis of HMRC Isa statistics by Bowmore Financial Planning, the gender gap between the number of men and women holding cash ISAs has “failed to narrow over the last five years”.
Data for the number of individuals subscribing to a cash Isa in the 2017-18 tax year (the latest available data) shows women accounted for more than half (55 per cent) of the total.
Men, meanwhile, represented more than half of all stocks & shares ISA holders that year, at 56 per cent (1.3m), in line with each of the preceding five years.
Bowmore Financial Planning warned that cash has historically underperformed as an asset class over the medium and long term, and this could continue.
It said cash has delivered average annual returns of 4.9 per cent since 1925, lagging behind global bonds (6.6 per cent), rental property (7.2 per cent), gold (7.7 per cent) and UK equities (12.4 per cent).
Bowmore warned women that “overinvesting” in cash ISAs meant they were overexposed to negative real returns caused by inflation, while predicting that interest rates would likely remain at their record lows “for years” to help support an economic recovery after the coronavirus.
Since March the base rate has been at a record low of 0.1 per cent, with average savings rates at a 13-year low, according to Moneyfacts.
Separate research from asset manager Schroders found young women (aged 18 to 34) were much more likely than any other group to be influenced by others when making a financial or investment decision.
Bowmore warned this could create a self-reinforcing cycle if the other women consulted also do not hold higher-risk investments.
A report published by Fidelity last month found that women are often left playing ‘catch up’ and £100,000 worse off in later life, as men are more likely to seek financial advice in their younger years than their female counterparts.