Why Are Women More Likely to Save Than Invest?

Why are women more likely to save than invest? IBKR’s Maria Dieguez sits down with self-investor and financial policy expert Betsy Dorudi to discuss the investing confidence gap, the barriers that keep women from entering financial markets, and why getting started can matter more than waiting until you feel fully prepared.

Summary – IBKR Podcasts Ep. 418

The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.

Maria Dieguez

Welcome to another episode of IBKR Podcast. I’m Maria Dieguez, working in the Institutional Sales team at IBKR, based in our London office. Our guest today is Betsy Dorudi. She’s a lawyer with extensive experience in financial service regulation, public policy, and government affairs, with more than 25 years of experience across fintech, banking, capital markets, payment, and financial regulation. Most recently, she served as a head of public policy at ClearBank, where she led policy and government relationships initiatives. 

She’s passionate about social justice and women equality. Through a mutual friend, I come to know that Betsy is an active self-investor, and I wanted to include women who take care of their personal finances. Hello, Betsy, and welcome to the podcast. 

Betsy Dorudi

Thanks for having me. Really excited to talk about women managing their own finances. 

Maria Dieguez

Great. So you have been self-investing for a few years now. Please tell us how you got started. 

Betsy Dorudi

My first professional job was actually working for a US stockbroker many years ago, and this introduced me to investment terminology and kind of gave me a general overview of stock markets investing. But I didn’t actually really start thinking about investing until I was 49, seven years ago. I had a few pension pots that I had really neglected over the years and never really gave it any serious thought to investing. But at 49, retirement was no longer really on the horizon. I knew I had to really start giving pensions and investments some serious thought. So that year I did three things. I consolidated three UK pension pots together into a SIPP, and I started investing in investment trusts. I also invested my US pension pot, which had been sitting there neglected for years and years, into a portfolio of growth stocks. And then I made a real commitment to myself to start ramping up all of my monthly contributions. And really, the last few years have really just contributed as much as I possibly could into my pension pots. At the time when I was 49, I didn’t have enough money to hire an investment advisor, either for the US or UK pots of money, so I had to do it myself. 

And I just started reading. I bought a subscription to a retail stock recommendation service, and then I just followed a buy and hold strategy. After I made my investments, I just really watched them for a good five years and built up my knowledge at that time. So now I read little and often every day about financial markets, and honestly, it’s been life-changing. Despite a few market dips, I will retire with a substantially larger pot than I would have had I just left everything as it was. 

Maria Dieguez

The data shows a persistent gender investment gap in the UK, with fewer women are actively investing than men. Maybe only 37 to 40% UK investors are women, as well as lower average portfolio sizes despite signs of growth among young demographics and high earners. One of the reasons discussed is the confidence gap. For instance, when it comes to financial literacy, only 18% of UK women rate their financial literacy as very good compared to 41% of men. But what is your takeaway from this? 

Betsy Dorudi

As I mentioned, I started my career working for a broker, and this familiarity with share trading gave me real confidence. But it was also influential for me to be raised in the US, where it seems like everybody owns shares and everybody talks about the stock market, and financial information is really quite widely available. But that aside, I had no more technical skills at 49 than anybody else. I just started by reading and then making some decisions. And I’ve learned so much, and I continue to learn. I continue to improve my skills. This year I’m learning about stop losses, so like I said, every kind of year as I go forward on my journey, I’m still learning. 

I would just tell people to get started and get started modestly. Just things like simple index funds. Start with what you can understand. It’s the most important thing, and then grow from there. 

Maria Dieguez

Mm-hmm. And what you mentioned about the US highlights a significant difference between the US and the UK. So according with some research, only 3% of UK individual assets, excluding pensions, are invested in stocks, bonds, and futures compared to 30% in the US. So investing in financial markets is far more deeply embedded in society. Another report states that women are qualified as too cautious, even though data doesn’t show a significant difference between men and women portfolio when allocated to riskier assets. Do you think that this is a barrier preventing women from starting to invest? 

Betsy Dorudi

I would say risk tolerance grows with confidence, doesn’t it? And one thing that women have on our side is we’re practical and we’re savers. And I think I wish that we could extend this kind of practicality into more agency in terms of making… taking charge of our savings and making investment decisions. We’re good about saving. We’re good about budgeting. It’s just what we do with our savings where we have this big gap. I think it– What I find also really interesting as the years go on and my investments do grow is that, as women, we have a number of barriers. Like, we have salary. We don’t earn, pound for pound, the same amount. But investment returns don’t discriminate. Everybody gets the same return, and I find that super exciting, yeah. So when you’re earning money, you’re earning the same as anybody else, whether you’re a man, woman, et cetera. So that’s a… I think that should be a really strong incentive. But again, I kind of go back to start with what you know. The investment platforms that I have, I can’t say I understand 100% of it any more than I understand the engine on a car. But I know what I understand. I’m confident with what I understand, and those have done me really well. 

Maria Dieguez

Mm-hmm. And the fear of making a wrong decision is there when investing in financial markets. How do you cope with this challenge? 

Betsy Dorudi

I think you have to understand that you’re never gonna have a portfolio that doesn’t have some things that maybe are a little disappointing. And what I found over the years, I’ve seen two big market corrections, in 2022 and then actually last year with Trump’s tariff day, his Independence Day. So I think what I’ve learned over time is that everything always comes back. Not to sell at the bottom, that’s really important. And not to expect perfection, but where you are when you start investing as opposed to not investing, it’s a dramatic difference. So again, I was trying to look and see what 1,000 pounds would’ve over time in compound interest in a bank account at, let’s say, two and a half percent, as opposed to investing in the FTSE 100, and it was a staggering difference. 

So I think mistakes will always happen or market corrections, even if you do well and invest in something, forces outside of your control. But part of the beauty of being a long-term investor is that over time, things inevitably almost always recover. So you have to have that long-term perspective and just stay in the game. 

Maria Dieguez

Mm-hmm. Yeah. And what do you think that can be done to make women become more in charge of their investments? It’s a matter of financial education, cultural change, have more of these type of conversations? 

Betsy Dorudi

I love this question because I work in policy, so I’m always thinking, “What’s the answer? What’s the answer? What do we do differently?” And I think for men and women, this goes equally, too, for men. I think there were three things that kind of came to mind, and one is I think we need to, in culture, normalize women managing money, women managing their finances. I would love to see in popular TV and film women managing finances and making investment decision as a normalized thing so that we just see it everywhere. We’ve got role models everywhere. I think that’s really important. We need to make financial information far more available than it is today. It feels quite niche. 

Like I might see on the 10:00 news an announcement of where the FTSE closed on any given day. But unless you really know your stuff, like that’s a pretty immaterial announcement. So again, the difference in the US is financial information’s really widely available all over the place, and when you watch the 6:00 news in the States, you’re gonna hear probably three, four minutes about how the markets did and some stories. So I think we need to have financial information far more a part of our mainstream culture. And then the last point goes to reform. It goes to legislative reform, tax reform. Our investment and pension rules are far too complicated in this country. Far too complicated. You’ve got fantastic execution only, as we call it, self-invested investor platforms, with Interactive Brokers. You’ve got these great platforms with all the tools and information people need, but you’ve got a broken rung in that the rules are so complicated a lot of people just can’t be bothered or it’s too frightening or it’s too complex to even get started. So I think we need to dramatically simplify investment and pension rules to get people really interested. 

Maria Dieguez

Mm-hmm. Good. So, Betsy, some takeaways from today’s conversation. Start now, even if you feel behind. Waiting for the perfect moment or perfect knowledge is more costly than beginning today. Investing isn’t about making mistakes. It’s about building a diversified portfolio and stay invested for the long term. And investing is a powerful tool for financial independence. Building wealth through investing can help close financial gaps that income alone may not. 

Betsy Dorudi

Absolutely. And it’s immensely personally rewarding as well. I’m halfway through a 15-year journey until I get to be around 65, and it’s a sense of accomplishment, it’s a sense of independence, and a sense of confidence. It’s a different skill. Now my friends’ husbands ask me to sit down, have a chat, and wonder, understand what I’ve done, what I’m doing. 

So it’s just a fantastic skill for women, for everybody to have. 

Maria Dieguez

Yeah. Agree. Thank you so much, Betsy, for sharing your journey as a self-investor with us. I hope this conversation will inspire more women to take control of their own finance. And thank you to everyone listening. We hope you enjoyed this episode of IBKR Podcast. See you next time.