Women hold less than men in ISAs despite more women paying in

Women held nearly £3,000 less than men in their ISA on average according to HMRC’s latest data.

The average man’s ISA was worth £39,370 in 2023/24, compared to £36,371 for women, leaving a gap of £2,999. This isn’t a lack of effort on women’s part, rather they’re hampered by their reliance on Cash ISAs.

Women are pulling out all the stops to build their ISA wealth. Despite being on lower average incomes, women made just over half (51%) of all ISA subscriptions during the year, so they’re making sacrifices to build a nest egg for the future. Part of the issue is that given they are on lower average incomes. There’s a chance that while they’re making a larger number of subscriptions, they may still be putting away smaller sums each.

Another significant issue is that they’re so heavily weighted towards cash: women paid into 54% of Cash ISAs, but only 41% of Stocks and shares ISAs. Given the fact that over time, investing tends to produce better returns than cash, it’s no surprise that men are building bigger ISAs.

In the 2023/24 tax year this will have had slightly less impact, because savings rates were riding high. It’s why, during the year, the gender ISA gap narrowed very slightly from £3,119 in 2022/23 to £2,999 in 2023/24. However, this is likely to be a blip rather than a change of direction, because now savings rates are lower and being outpaced by investments, it’s highly likely to widen again.

The role of investment returns is clear from ISA values at different ages. Under the age of 24, women have £876 more in their ISAs on average than men. Men overtake by the age of 27-29, when they have £2,761 more than women, and then the gap keeps growing as they get older until it hits £4,010 at the age of 54-56 and £5,215 at the age of 60-62.

While women can’t do much to move the dial on the gender pay gap, they can make a significant difference to their own position by considering investing alongside their savings. Unfortunately, that’s easier said than done, because having lower average incomes, and facing changing working patterns through their careers can lead some women to feel they can’t afford the risks they associate with investment.

• Read: Is your ISA keeping pace with your peers?

Before anyone makes this call, it’s worth getting to grips with the level of risk involved, because otherwise it’s easy to overestimate the risk of investment losses and underestimate the risk that the value of cash can be eroded by inflation over time.

One option is to start small. You can start investing from as little as £25 a month and commit to finding out more about investments as you go along. You can gain experience of the short-term ups and downs as well as the long-term growth, so you can build your confidence while you boost your long-term financial resilience.