In line with our risk management framework, today we published our Q4 2019 performance update.
Can P2P lending bridge the investment gender gap?
There are a number of discrepancies between the two sexes within personal finance in the UK, but one which has been identified as particularly disconcerting of late is the gender gap with respect to investing.
Figures available on the HM Revenue & Customs website better illustrate the extent of the issue. Over a million men have stocks & shares ISAs, while just over 800,000 are held by women. Across all age groups within this criterion, men outnumber women too, with the biggest gap coming in the 25-34 age bracket, where the ratio is nearly 2:1.
What makes these figures all the more significant is the corresponding comparison between the sexes in terms of cash ISAs. Indeed, women have opened more cash ISAs than men – with a near 60:40 ratio in the 45-54 age category alone.
It thus seems safe to infer from this statistic that the issue is very specific to investing, rather than the exclusion of women from personal finance as a whole. Backing up this point were the findings of research by the investment firm Fidelity, who surveyed men and women with cash savings but no investments. Interestingly, some 35 per cent of female respondents said they didn’t feel confident investing, while only 26 per cent of males offered the same response. It was also notable that a greater number of female respondents cited insufficient knowledge of investing and a lack of understanding of the stock market as the main reason for their reticence.
How does peer-to-peer lending compare to stocks and shares?
Peer-to-peer lending (P2P) has many virtues, but perhaps one of its greatest attractions is that it is fundamentally simple and straightforward. Platforms have varying approaches to how returns are earned (and safeguarded), but the common theme among prime UK platforms is that these returns are stable and predictable.
And of course the recent launch of the new Innovative Finance ISA – in addition to inclusion within the Personal Savings Allowance – has ensured P2P lending has become tax efficient, which in turn means that ever more pennies are ending up in the pockets of investors.
We do not shy away from the fact that there are risks involved, and returns (and capital) are not guaranteed – nor covered by the Financial Services Compensation Scheme. But, in addition to putting safeguards in place, regulated platforms are required to communicate these risks very clearly to potential customers, while it is mandatory for members of the Peer-to-Peer Finance Association to display in-depth performance statistics on their website.
A bridge to investment?
Investment of any kind is a very personal decision, and each individual has a different level of risk appetite – regardless of gender. It is thus absolutely vital that anyone who puts their hard-earned money into peer-to-peer lending is comfortable with the levels of risk and return involved, and has a clear idea of how the platform works, and what their investment will entail.
But it should also be borne into mind that the market leader among easy-access cash ISAs pays out just 1.01 per cent at present – and, even then, there are restrictions involved. Given that inflation is currently at 2.7 per cent, and expected to increase for the remainder of 2017, such savings options are, in effect, guaranteed to diminish your money in real terms – despite the fact that they masquerade as ‘guaranteed’.
It underlines the need for alternative ways to grow your money, and peer-to-peer lending is rightly positioned as a midpoint on the risk spectrum between savings and stocks and shares. But it is also well placed to act as a gateway into investment on a broader level, and, given the clear gender gap in this regard, there is surely good reason to believe the P2P sector can play a pivotal role in levelling the playing fields.
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
Since opening our doors back in 2014, we’ve always prided ourselves on living and breathing two key principles at Lending Works: innovation, and putting the customer first in everything we do.
With the retail sector enduring its fair share of challenges, companies are looking at new ways to attract customers, and drive conversion. In an overcrowded, dog-eat-dog marketplace, with behemoths such as Amazon flexing their muscle, it’s easier said than done.
On 4 June 2019, the Financial Conduct Authority (FCA) released its new regulatory framework for peer-to-peer lending (P2P); a Policy Statement known as PS19/14. As you might imagine, it's a document which, following a three-month consultation, is a hefty read of no fewer than 102 pages.
Wednesday’s Budget speech, coupled with the cut to Bank of England rates, represented a decisive response to the coronavirus. Here we analyse the impact it will have on mitigating disruption from Covid-19, along with the long-term implications of this significant fiscal stimulus.
Rumblings from the Treasury ahead of next week's Budget suggest tax grabs will be needed to fund increased spending, and it appears UK enterprise could be in the firing line. Here we articulate why targeting entrepreneurs and small business is ill advised.
In a difficult climate, customer acquisition and lead generation present stern challenges for UK retailers, and a great deal of marketing spend invariably gets directed towards getting feet through the door.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The 2019-20 ISA season has been a damp squib, with banks disinterested in attracting savers’ cash, rates cut, and the stock market in freefall. However, the emergence of the IFISA means alternatives beckon for those seeking a stable middle ground in terms of risk and reward.
In a decade of slow recovery, the rapid rise in asset prices has been the standout. But how sustainable has price growth been, and could we be in the midst of a bubble?
Most people consider income tax to be a given, but in the UK it is barely two centuries old. In this article, we look at how this tax has developed over the years, and also why it is set to remain at the core of our tax system for many decades to come.
Open banking celebrated its second birthday last month, but has the ‘revolution for financial services’ that was promised actually come to pass? In this article, we look at the progress the initiative has made so far, and what the future holds in the face of high levels of scepticism.
On the face of it, a 'broken' energy market needed fixing, and the price caps introduced in early 2019 were heralded as the solution. But, one year later, have they actually helped consumers save?