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Gender wealth gap

Learn how women can narrow the financial gender gap by managing their investments wisely.

Learn how women face a different financial life journey to men and how to ensure the outcome towards the end of their lives is not negatively impacted as a result. By managing investments wisely women can narrow the gender wealth gap that can persist towards the end of their lives.

How much of a gap do gender differences create in women’s finances?

The story of Joe and Jane

We wanted to show how events and issues in women’s lives can affect their finances. So we compared the wealth of an illustrative man and woman (Joe and Jane) during their lifetimes. Here’s what we discovered…

Research has examined the differences between women and men when investing. However, research has tended to look separately at other factors, such as pay differences between the genders and lifespans. Only by seeing the big picture can we answer questions like, how much of a gap do gender differences create in women’s finances? And can women narrow this gap managing their investments wisely?

For the answers, we modeled the financial outcomes of Joe and Jane based on five of the main factors affecting how they create wealth:

• pay gap
• career break
• flexible employment
• life expectancy
• risk tolerance

In our model, Jane and Joe are 25, single, have recently started work, and want to:

• preserve and grow their inheritance of one million US dollars for the next generation
• buy a house at the age of 35 by taking out a mortgage
• enjoy a decent standard of living later in life

To model the effect of gender differences, we assumed that Jane:

• has a starting salary 10% lower than Joe’s, due to the persistent salary gap between genders
• receives a total gross salary less than Joe’s over her lifetime because she takes a career break of one year and works part-time later on
• invests more conservatively than Joe
• lives longer than Joe

We also assumed that Jane’s expenses will grow less than Joe’s – and that both their real estate and pensions are the same.

How can Jane achieve her goals?

The gender wealth gap that can persist towards the end of your life - how can Jane avoid this situation?

Because Jane has less money to start with and accumulates less wealth over her lifetime, she would benefit from investing her funds strategically – and focusing on achieving her lifelong goals.

How might a moderate investment risk strategy help?

Jane could benefit from establishing a level of risk she’s comfortable with that puts her in reach of her goals. She could then set up an investment portfolio for life, and invest in a disciplined way for the long term.

What does this all mean for Jane?

To achieve her goals, it pays for Jane to:

• understand the factors that can harm how she builds her wealth, and how those factors might play out over her life. Paying attention to the impact of flexible working and baby breaks is important
• understand risk and how taking calculated risks with money can help it grow
• become more financially confident, so she can ask the right questions and feel sure she’s choosing the right investment strategy
• understand how to separate her financial and personal goals when managing her wealth

Infographic mentioning the details of the story of joe and jane

UBS Wealth Way

Financial planning for your life projects

Our research shows almost 60% of women do not engage in the most important aspects of financial well-being: investing, insurance, retirement and long-term planning.

With our proven Wealth Way three step consulting approach we help you create a financial plan to achieve your life goals, so you can minimize Jane's situation illustrated above.

It starts with a conversation and questions to uncover what’s important to you: your financial goals, values and legacy.

We’ll jointly determine three strategies – liquidity, longevity, and legacy – and tailor them to your short- and long-term goals in life.

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