By now, we all know there is a significant pay gap between men and women. But did you know there is an even bigger overall wealth gap. Did you know women in Australia retire with 47 percent less superannuation than men? And more and more Australian women are retiring in poverty?
This is why it's so important for young people, particularly women, to be engaged and aware of their finances and the options available to them. Simply putting your money into a savings account and stashing it away is not going to help you create a lifestyle that will cushion you into the future. At the current interest rates in Australia (as of September 2021), inflation is higher than the interest you will get in any savings account. This means your money actually gets less valuable each year. So, what's the solution?
Co-founder of share trading platform Sharesies, Brooke Roberts is an entrepreneur on a mission to even out the playing field in the realm of wealth development. It's the reason she helped create Sharesies, a platform that allows you to invest with as little as 1 cent - no minimum buy in. We connected with Brooke to ask her all our financial question: how we can reduce the wealth gap between men and women and how to start investing if you've never invested before. Below, she shares with us her tips on how to choose what to invest in, how to get started and how to buy stocks.
In your view, why do you think there's such a significant wealth gap between men and women?
There's a few things that play into why there's such a big wealth gap. Women live longer, we're more likely to take time out in our career. Also, because of the gender pay gap, we typically get paid less that ultimately, there's this divide that occurs. You can really see it in superannuation, I think women have a 47% lower balance than men.
I really don't like it when it's put on "oh, well, you know, it's just women are more risk averse, or they just don't, they don't know how to make more money." I don't believe that's the case.I think that the issue has been is that the whole system has been set up and hasn't really had women or other underrepresented groups really be part of it.
When women part of the solutions, the financial solutions, like investing, and when other underrepresented groups get to be involved and be more included, they're able to reach other people and communicate in ways that actually connect and create products that are actually more inclusive. And I think that's what I'm really excited about. The more people become involved in creating the system, the more that this financial system will work for more and more people.
Why do you think investing is so important for women in particular?
We live longer, and we ultimately need to know our financial situation and make sure we're setting ourselves up for the future. I think also, it's really important that women have that financial independence and, and know what's happening with their money. No matter if you're in a relationship or not, knowing that you're building you your financial independence and feeling really empowered for the future.
That's why it's really important for women to to start building their wealth as early as they can. And it doesn't matter how much, just the amounts that can afford. Starting, you know, getting part of the system, because as we start to build our wealth and, and learn about investing and how the economy works and, and have the access to these opportunities, it really does set us up better for the future and to close that gap.
We typically do take those caring roles in the family, traditionally, whether that be for our parents or children or what others call more community-based work. It doesn't mean that we don't, we shouldn't do that or not do that. But earlier we start investing, the more we can strengthen our, our financial future, and the financial future of those around us.
What are the main things that we can do to help close this wealth gap?
If you're working, making sure that you're getting paid what you're worth, I think it's really, really important. And if there's gender pay gaps at the companies you're working in talking with your manage. See what others in the industry, what they're getting paid and making sure that you're getting paid fairly for what you're bringing, I think that's a really important step to take.
Then it is also about starting to build your financial independence and empowerment through starting to invest. Building your wealth with small amounts. That's what we created Sharesies for, to remove that minimum buy in and so that there is no minimum investment. You can put whatever amount you want in and start learning by doing and getting engaged and building a portfolio over time.
The earlier you start investing the better, I've heard it said that Einstein called the eighth wonder of the world compounding returns. Over time as you make returns, you make returns on your returns and that grows. And so that's why investing early and often as is such an important concept in terms of wealth development.
I think what women are really good at and some research really showed is that we're really good at sharing with our friends and family, I think we think it's around like 23% of women are happy discussing investing with friends and family, as compared with 15% of men. Talking about these concepts and sharing what we're doing and, and removing the taboo around money and investing because no longer is it about "I'm an investor, I'm rich." That's totally changed now, where anyone can be an investor, it's not just for the wealthy few.
Is investing, either in shares or other investments, better than keeping your money in a savings account?
It's proven over time that investing does typically outperform your bank account. Also aside from the financial return, there's also those all those really awesome non-financial returns you get in terms of being really clicked into what's happening in the economy, or what's happening with businesses or putting your money into things that you really care about, and want to see the change in the world. Our money has a lot of power. It's important that people get that working harder for society and for themselves.
Let's say you're a young woman, you've just graduated university, you're 21 and no one has ever talked to you about stocks or investing before. You just really don't know how to get started. What's your advice for someone in that position?
That sounds quite a lot like me when I was younger. I don't come from a family of investors or that made investments.
So you're getting your first income. But when you're starting to get that first, your first full-time income potentially if you've been studying and working part time, is like making sure that you think about "I've got this money, how do I make the most of it?"
When I began to study finance at university and naturally I got really, really interested in money and finance, how it worked. And I wanted to invest. But when I looked at it, I was like, "Whoa, I don't have money for this". It was $30 a trade and, you know, it was quite expensive. I want people to have the opportunity to invest with amounts they can afford, and they can give it a go.
Then when you're looking at what to invest in thinking about "what is important to me, what's the future I want to see in this world?" then find what companies and funds are working towards that. That's something that I think about in terms of when it comes to investing, and I build my portfolio over time that way.
Our blog is a great spot [for information]. We've got podcasters such as Recap, which every day recaps the financial news that's been happening in a fun and easy, digestible way in 10 minutes. And then we've got this one called Lunch Money where we interview CEOs of listed companies and what we're trying to do there is like a lot of the institutional investors or get to go to the CEO or the boards and and hear about why we should invest money in there.
How would you choose a stock or fund?
So I choose based on the future I want to see and what those businesses are doing. I like a range of exchange traded funds and a few companies. And I like to share the funds that has a socially responsible purpose behind them and investing in businesses that are a force for good. I really care about that businesses take into account, not just shareholders, but stakeholders and think about their impact on the environment and communities.
All investments carry risk, right? There's different risk profile. On Sharesies you can see if something's like a one risk level or a seven risk level, with seven being highest. So at the one risk level, which is a lower risk level means that typically there's lower volatility, which means the price doesn't usually fluctuate too much, down this end of risk you'll see bonds. It's typically lower risk and lower reward to in that regard. But, then you've got the higher risk, which is where the prices can be quite volatile and go up and down. That's where a lot of individual companies sit. It's all based on one company's performance, and what that does. Then exchange traded funds (ETFs), are a basket of companies. So it might be the Australian top 200, where you're buying the top 200 companies in Australia through this exchange traded fund. Therefore, if one performs and one doesn't, it balances out a bit.
In your view, what's the best way to grow your wealth into the future?
Starting early with however much you can and building it over time with amounts you can afford. That's my view. When you're starting early, you know, let's say 20 bucks a week, and you're starting to put that away. Then you might get a pay rise and go look, I'm going to invest a bit more now and might take it up to 50, whatever it might be. But over time, if you're consistently putting money in it's called dollar cost averaging. You're not trying to find the highs, like buy low, sell high kind of thing. You're you're just constantly investing in businesses or funds that you care about, holding it up over time. You might get some dividends paid out, or the price might be increasing.
That's where compound returns are really important too because you get returns, whether it's dividends that you reinvest, or the price gains that you're getting through investing, and continuing to invest, you get returns on your returns, it keeps growing. I think that it's there's a really important and underlying part of investing that we're not all taught as early as not as we should be, unfortunately.
Do you have any best investment tips?
Nobody's an expert on day one, you know. You're always learning and I think taking that approach with an amount you can afford and, and backing yourself.
Tell me a little bit more about Sharesies?
We started Sharesies in 2017. At that time, there was heaps of media about house prices going up and millennials can't get into housing because they spend their money on smashed avocado - all that kind of stuff. There was this rhetoric out there that generations aren't going to be able to get ahead.
The seven of us that founded Sharesies we really believe that everyone deserves equal opportunity to grow their wealth. There's no reason that someone was five dollars and five million dollars can't have the same investment opportunities. So we set out to find a way where we could help make investing more accessible.
We learned through that research that 99.5% of people want to be investors. It's an aspirational thing. But they felt they couldn't because they needed heaps of money, or they needed to know more, or they needed to have a degree in finance, or they felt just left out. Those are the barriers that we set out to remove. We want to make sure that people have access to investing with any amount, and then also help them build the confidence and motivation as they build their portfolio over time - and to produce like educational content to help people connect what's happening in the economy to what's happening in their portfolio. We've got access to the Australian Stock Exchange, New Zealand Stock Exchange, and four US exchanges. We're the first company to fractionalised the Australian stock exchange in the New Zealand one, which means that you don't have to buy one full share. You just invest the amount that you want.