Where are the women investors?

Xinja’s equity crowdfunding campaign is a key part of building a bank with our customers and in their interests. We have always said we would do equity crowdfunding (and were the first company to launch it in Australia) to give our customers a chance to own a piece of Xinja so it becomes “our company”. The response has been amazing and humbling, but as we reflect on the large number of Australians who have supported us with their hard-earned money, we can’t help but be struck by the low number of female investors. What’s going on?

Low level of investment by women in Xinja equity crowdfunding

Looking at the first week’s data (up to approximately $1 million) there were almost 6 times as many men investing as women. The average amount invested was not that dissimilar ($1,507 for men and $1,276 for women) but the bottom line is women only accounted for a paltry 13% of the overall amount invested.

There were almost 6 times as many men investing as women.

So from a gender perspective, equity crowdfunding, it appears, is hardly levelling the investment access playing field. In fact, with investments overall, 42% of investors are women, so why is Xinja’s equity crowdfunding so skewed to men?

Do women have a low appetite for risk?

Now there is a lot of artefact in this. Perhaps it was largely driven by awareness - those who were made aware of the opportunity. Pre customers already signed up for Xinja represented a large proportion of investors and they currently skew male. There are lots of reasons for this - early adopters of new technology for example are often male, although the reasons for this are rather depressing (and arguably part of the same problem…...we’ll leave that for another day) but the gender gap amongst investors is much more pronounced. So what is it about equity crowdfunding or fintech investment that has not captured the imaginations and investment wallets of women?

What this points towards is attitudes to risk. As Anna Gaviola from CBC points out:

“One reason [for lack of female investors in bitcoin] is the well-documented lower risk tolerance of female investors.” - Anna Gaviola, CBC

And speaking to the Treasurer of Xinja, Verity Froud, she pointed out “ Equity Crowdfunding is a risky investment” and perhaps women are simply more risk averse (the same reason less young women die in car crashes than young men etc etc) however whatever the reason, the impact is compounding the problem of financial inequality:

“By not participating in the high risk assets the women are missing out on the higher yield assets. Across a portfolio this is likely to reduce earning and long term lead to less wealth. “

Lack of investment by women is both a cause & effect of financial inequality

Overall this has caused me to reflect further on gender imbalance in investment generally. Women’s superannuation balances are a lot lower than men’s. Of course, that reflects the gender pay gap (according to the ABS, the stark reality is that women earn on average 15.3% less than men), periods out of the workforce due to family care, the costs of childcare and the costs of family breakdown. And the effects of all are this are frightening - as illustrated in this graph from the Time.com Money section….

Arguably, women have less time to consider and research investment - again according to the ABS, women spend 1.7 times the amount of time on unpaid domestic work and childcare than men, but the same source says that men spend double the amount of time on ‘employment related activities’ so superficially, it’s not just about research time.

The number of women who will face financial hardship in retirement is growing.

The road to understanding this in detail is long and winding, however I also believe that we as women have not focused on our financial wellbeing as much as we could or should. The number of women who will face financial hardship in retirement is growing. It is worth reading the reports “A Husband is Not a Retirement Plan- Achieving Economic Security for Women in Retirement”, published by the Commonwealth of Australia, 2016 and “Not So Super, For Women – Superannuation and Women’s Retirement Options”, by David Hetherington and Warwick Smith published by Australian Services Union and Per Capita, July 2017. These reports recommend that several issues need to be addressed by employers, funds and the Government. 

Is the answer in the closet?

However, do we as women also need to empower ourselves and take any actions that are in control?

I remember many years ago, watching a “Sex and the City” Episode where Carrie Bradshaw, one of the main characters wanted to buy her New York Apartment. However, she couldn’t as she had no savings, but she did have cupboards full of designer shoes. Unfortunately, her bank (and Xinja) did not (and will not) recognise shoes as an investment asset.

She couldn’t [buy her apartment] but she did have cupboards full of designer shoes….

A couple of days ago, I did my own closet clean out. I looked at the piles of clothes and shoes that I was discarding (some of which I had never worn or worn once or twice) and thought what would these piles look like converted into shares or savings or added to my superannuation balance?

But this also potentially trivialises the issue. We are not all Carrie Bradshaw's with more disposable income than sense (and for every pair of unnecessary shoes in that echelon of society, there is probably a male equivalent - the titanium golf clubs, the overpriced car, gym equipment rusting in the garage, the latest gadget - vanity crosses the gender divide :-)). Many women are not choosing between shoes and shares, but investment or meeting the home loan or rent payments, or funding a family holiday or opportunity for a child. Women are better long term savers than men, so perhaps it is not attitude, but simply access to funds?

Many women are not choosing between shoes and shares, but investment or ….funding an opportunity for a child.

Do women need to change their attitude to money?

Also I believe (and I know that I am guilty of this), that we are looking for large sweeping gestures and actions that make a difference. Noel Whittaker, the author of “Making Money Made Simple”, recently calculated that if someone invested $2.83 per day for you since birth you end up with nearly $4m at age 65, based on the performance of the All Ordinaries ASX Accumulation Index. The actual cost of the $4m in cash payments is circa $67,200. The return comes from the compounding of return and capital appreciation. This highlights the need and very real benefits of the small incremental investments, accumulated consistently each day or week or month.

This highlights the need and very real benefits of the small incremental investments

Financial well being is core to holistic well being (health, family, relationships, meaningful work, financial stability and overall meaning). So why is it that knowing this, that we buy things that we do not need, and which are not in our best interests? Or what do we think are the reasons for the truth staring at us from the graph above?

So, I asked this question of some of the other women in the Xinja Executive team. What do you think about these issues and women’s financial health?

Betsy Westcott, Director of Retail Banking at Xinja, commented: “For centuries, women were excluded from all discussion about finances,” so their risk aversion might come as no surprise; “the tide, however, is turning” she thinks.

“For centuries, women were excluded from all discussion about finances…..the tide, however, is turning” - Betsy Westcott, Director of Retail Banking, Xinja

As Van Le, Xinja’s Director of Strategy and Innovation points out: “Men collectively have historically had more years of experience from one generation to another of dealing with financial risk. Women on the other hand, are not typically surrounded by networks that expose them or even engage them on matters of financial risks and opportunities by default - they have to self select and out themselves there,” so this is hard work within our current social constructs. Notably, she comments, one of the most successful Australian books on personal finance is Scott Pape’s ‘The Barefoot Investor’ - no Carrie Bradshaw here……

“Women are not typically surrounded by networks that expose them or even engage them on matters of financial risks and opportunities.” - Van Le, Director of Strategy & Innovation, Xinja

We at Xinja are busy creating apps, nudging prompts, data loops and dashboards that will support all of us (male and female) to create financial wellbeing. We invite you (male and female) to put forward your ideas, comments and suggestions on these issues below. This is a BIG topic and one we intend to explore further to best service our customers - as we say at Xinja, money runs deep.

I for one, hope that at yours and my next closet or garage or house clean out, the discard pile is negligible and that our overall investment portfolio has benefited from better incremental day to day decisions. I also hope that whilst there are myriad reasons women invest less than men, that mindset is not one of them.

Lindley Edwards

Chair Xinja

Disclaimer: This article is not advising or recommending that anyone invest in Xinja as Xinja is an elevated risk early stage investment. Also, as Director of the organisation I have a conflict of interest in this investment. The use of Xinja as an example is because this data is available to me.

Like any investment, Crowd-Sourced Funding (CSF) is risky. Investors may lose their money and the business may not achieve its objectives. You should consider the CSF offer document and the general CSF risk warning contained in the offer document in deciding whether to apply under the offer.