We all know that women make $0.77 cents to a man's dollar. It's a gap that needs to close, but there's an even larger gap that no one is talking about.
It's widely known that you're never going to get rich off your salary. It's important to invest so that your money begets money.
Women don't invest the same way that men do. A lower percentage of women have started saving for retirement than men, and we keep a larger chunk of our change in cash. Women keep an average of 71% of their assets in cash, as in not invested.
A man may make a salary of $100,000 annually. A woman in the same position will make an estimated $77,000. That's already a $23,000 difference. In ten years, that $23,000, if invested, will turn into $37,465 (with 5% return). After twenty years, it will be $61,026. If women don't invest any of their income, that gap grows even larger. It is estimated that over the course of a lifetime, the gender investment gap can cause women up to $1.7 million dollars. That's a lot of dough!
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Closing the gender investment gap is easier said than done. It's unfair to put the onus on women — it's important, for example, that women are educated about investing and encouraged to invest the same way that men are — but there are some interesting tools popping up to help with developments.
Acorns is a great resource because it's easy and intuitive — it rounds up to the next dollar on every purchase that you make, and invests the change. This form of micro-investing is an easy entry point. Once you set it up, you don't really have to think about it, and the investments are so small that you won't even notice that the change is missing.
One company, Ellevest, was created with the specific intent of making investing more accessible to women. The founder, Sally Krawcheck, realized that investing was predominantly "by men, for men," and so she aimed to create a space that encouraged women to invest. They aim to counteract the messages that women are given about investing being a boys' club.
Ellevest has a similar set up to Acorn. You fill out a questionnaire about what your goals are and what you're hoping to get out of your portfolio. Then, they will recommend contributions, timelines, and portfolios to help you achieve your goals. They have a killer interface— while not mandatory, it certainly helps, especially if you're new to investing. It's easy-to-change, and you don't have to worry about being the odd one out.
Another great option to help close that investment gap is to take advantage of your company's 401k. Your employer should be paying you the same salary that they would pay a man for the same position, but if they're not, it's all the more reason to take as much free money from them as you can. If your employer offers a match, take advantage of it. That free money is going to accrue compound interest, so that you can live your retirement in style.
It's okay that women invest differently than men. The important thing is for us to start investing.