Investing in ISAs: Which option is more rewarding for females?

The choice between investing in a Cash ISA or a Stocks & Shares ISA can be a difficult one. Yet for the more risk-averse female, taking a leap of faith and opting to invest in the stock market could boost your savings over the longer term.

As the saying goes, money makes the world go round. But who’s actually better at investing – men or women?

It’s always been, and still is, the case that male investors are more numerous, which might lead you to assume that this experience would give men the edge. Yet Warwick Business School’s study in 2018 revealed quite the opposite – namely that women find more success with their investments thanks to their tendency to think long term, trade less frequently and avoid riskier investments1.

Nevertheless, females are much less likely to invest and put these skills into practice. More subscribe to Individual Savings Accounts (ISAs) than men do, but women are more inclined to opt for Cash ISAs over Stocks & Shares ISAs – and, unfortunately, this can be a costly mistake.

More than half of all ISAs are held by females, but, in the last tax year for which data is available (2017/18), 3.4 million women subscribed to a Cash ISA as opposed to 2.9 million men, and just over a million women paid into a Stocks & Shares ISA compared with 1.3 million men2. The upshot of this was that the average market value of a woman’s ISA in 2017/18 was £2,812 lower than that of a man’s3.

Cash ISAs vs Stocks & Shares ISAs

While Stocks & Shares ISAs present a certain amount of risk, they’re still likely to beat the return you could get on cash savings over the long term. With interest rates currently at an all-time low, cash savings will earn you practically nothing, and your money will also be losing value in ‘real terms’ because inflation weakens the spending power of your money as time goes on.

It’s understandable that a Cash ISA might appear to be the safer option, and it’s certainly wise to keep your emergency fund in cash. However, for savings you wish to access in the medium to longer term (five years or more) – for example, if you’re planning on putting down a deposit on a house or thinking ahead about your retirement – a Stocks & Shares ISA may lead to more growth (more about this below).

How much will I make?

The most favourable rates currently offered by Cash ISAs are around 1%. This is not as clear-cut as the amount you could earn from a Stocks & Shares ISA, as that all depends on your personal portfolio.

The golden rule of investing is to stick at it for as long as possible, to give your money the opportunity to make a recovery following any negative years. If you’re investing for children, for example in a Junior ISA, it makes good sense to invest, precisely because you have many years to make up any losses and give your money the best chance to grow.

Can I access my money?

Your money can still be accessed in a Stocks & Shares ISA, although most investment platforms will take a few working days to sell your investments and send the cash to your bank account when it’s needed. However, you can open one Cash ISA and Stocks & Shares ISA in each tax year, so why not have both and use them for shorter-term and longer-term savings?

What will I need to consider?

If you decide a Stocks & Shares ISA is indeed your best option, there are some important questions to bear in mind:

What do I want to achieve?

If you’re investing for a particular purpose, such as your retirement, stability might be your main concern. However, if you’re just starting out on your savings journey, or just want to make your money work smarter, you might feel comfortable taking on a little more risk. If you’re certain about what you want to achieve and by when, it’ll be clearer which product will best suit you.

How long am I prepared to invest for?

Stocks & Shares ISAs are likely to perform better over a longer term. So, make sure that investing in one for a minimum of five years doesn’t conflict with your other financial plans. 

Would I benefit from a helping hand?

Taking the decision to invest can be daunting, and all the more so for females who may not have felt their way in the stock markets before. Working with a regulated financial adviser can give you some much-needed peace of mind that you’re making the right choice according to your circumstances and help you understand the benefits of investing in a Stocks & Shares ISA.

Take a leap of faith and make your money work for you – contact a Wellesley financial adviser today on 01444 244551 and start making plans for a secure, and therefore more rewarding, financial future.


1 Warwick Business School, Are women better investors than men?, June 2018
2, 3 HMRC, Individual Savings Account (ISA) Statistics, June 2020
4 IG, What are the average returns of the FTSE 100?, May 2020

The value of an ISA with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than you invested. An investment in a Stocks & Shares ISA will not provide the same security of capital associated with a Cash ISA.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

Please note that St. James’s Place do not offer a Cash ISA.

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