# Man Eating Woman

in LeoFinance2 days ago

Interesting stat from Australia collected by Finder:

On average, men have \$36,004 invested in shares, compared to just \$9884 for women and they also have a higher ratio of shares to savings than women, with 74 per cent as opposed to 29 per cent. source

They say "just" in the article with regard to the amount in shares, but the ratio between shares to savings is the interesting part. While there is a lot of talk about income disparity and the like, I think that it is also good to consider other aspects of the equation.

For example, with 74% in shares, that means that in total, the men in the sample have about 48,000 dollars collected between shares and savings. Women with 29% in shares however, have a far lower total of 32,000 dollars worth. That is a massive gap where men have 50% more than women. However, This means that the men have about 12,000 dollars in the bank, while the women have about 22,000 dollars in savings. Meaning that women out save men almost 11:6.

But, what kind of difference does it have over time, for example ten years?

Let's use the quick and dirty Rules of 72, which I love! It is a way to work out compound interest in the head and I think everyone should learn it.

Years to Double= 72/Interest rate

This means that we can work out in our head a rough calculation of how long it takes an amount to double. For example, if the average interest rate was 5% - it would be 72/5 = 14.4 years. So, at 5% interest rate, 1000 dollars today would be 2000 dollars in 14.4 years from now.

Assuming the average ROI of the shares is 10%, if we put 10,000 dollars in, it would take 7.2 years to become 20,000 dollars. Now, most people don't put in 10,000 dollars at a time, so this is added to incrementally, but over the space of the 7.2 years, large gains can be made. However, putting the same away into a savings account will see what?

Well, with the interest rates as they are, savings accounts return close enough to zero interest to make a difference and not only that, the return is so far below the inflation rates, that having money in the bank is literally costing about 4% a year - meaning that if you saved 1000 dollars today, in a year from now it would have the same buying value as 960 dollars today. 40 dollars is a lot to lose, especially considering that the 1000 dollars invested into a 10% ROI vehicle, would see a 100 dollar gain and ~56 dollars once inflation adjusted.

So, over the space of the 7.2 years, the difference is obviously enormous. This has profound impacts on personal finances too, as while it might feel good to have that liquid savings on hand, every time it is needed, it is eating into a capital that is already shrinking. Having "enough" liquid on hand offers a similar security for most things but the majority of the total is working at generating income in the background.

It isn't often that a person in Australia suddenly needs 12 thousand dollars cash, but it is even rarer that a person needs 22 thousand. However, in the exceptional circumstances that it might be needed, shares are generally pretty close to liquid anyway, which means that they can be liquidated to make up the shortfall quickly.

Now, the next aspect in this is the observed gender differences when it comes to risk aversion, with many studies over the years showing that women are more risk averse. What this could mean (I have no visibility on this) is that not only are men willing to risk more in generative activities over savings, but they are also putting their money into higher risk assets, meaning they are also opening themselves up to higher return. This means that for example, instead of getting a 10% return on the 3/4 of their wealth in shares, they may be getting on average a 15% return.

With the law of 72, that means that 1000 invested today would double in 4.8 years - which is obviously a massive difference in outcome and if invested for a total of 10 years, that would see a 400% gain on the initial capital. Again, these ROI numbers are pulled from thin air, but they are just to demonstrate the differences.

While a thousand dollars in ten years will end up as 4000. Even at the higher risk, 300 dollars will only end up at 1200 dollars - so there would be a 2800 dollar shortfall over the space of ten years. Start extrapolating that out to larger numbers over the space of say 40 years, and the differences are monumental.

What this means is that at least partly due to risk aversion, the lost potential is absolutely enormous and has severe impacts on life consequences - even though at every step of the way, women might have more "in the bank" than men. This not only affects the individual though, since economies are run on investments, where we spend our money matters and it means that women have less voice in the direction of investment capital.

Now, the interesting thing here is that even with pay equality (not an argument I want to get into please), due to investment habits, the men on average would still be getting "paid more" as they will be using a greater percentage of their income to generate income streams that widen over time. This then leads to equality again, as pretty soon, it is again the "rich old men" with the money who dictate capital flows and who gets what, even if indirectly.

Another 5 per cent have moved some of their savings into cryptocurrency. Finder’s data shows the average Australian has \$904 in cryptocurrency and \$259 in micro-investing apps – the equivalent to 3 per cent and 1 per cent of what they have in savings.

this is also interesting and while it doesn't mention it, it would be good to know what the demographics of this 5% are also, as they are likely (in my opinion) on average, going to outperform all of the other investments combined over the next decade. This means that even if they hold the 3% there, that could essentially generate double the ROI of the other 97% of their total - if they invested all of the other 97%.

With the early adopter advantage in play, if the average early adopter and early majority investor is male, they are going to get inflated gains in respect to those who come after, who are more likely to be female. This means that going forward, not only will the wealth gaps widen, but even in the same populations the gender wealth gap will widen as well, creating a whole host of other issues too.

Now, this piece isn't about some ridiculous battle of the sexes, it is about financial literacy and the consideration for all of us as to whether what we are doing is in our own best interest, or in the interest of our society. I would far prefer see a greater representation of the entire world affecting the economy, but in order to do that, requires people learning about how options and how they behave in the economy now.

If we aren't willing to risk what we have in terms of our wealth, the economy is going to punish us through our ability to generate more wealth. This means that we will increasingly have less to invest, while those who take even the slightest of risks will have an increasing stake and draw on the pull, and the power to direct more their way.

This is something to consider for all of us.

If you want a better world - own the one you have first.

Taraz
[ Gen1: Hive ]

Posted Using LeoFinance Beta

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Oh man... I'd never once considered that even if pay were equal, there would still be an outsized portion of rich old dudes controlling capital.

I think men can be more risk-tolerant because a.) we do generally earn more and b.) we can live on a lot less.

Anecdotally, if things go extremely badly for me, I could still work and live in a tiny home, or someone's couch or an RV... but my partner needs way more space and time in order to work (ie, proper bathroom access, wardrobe, etc). Working remotely has definitely evened things out a lot between us... which is amazing, but it's unlikely to be a permanent change.

I definitely hope that younger generations are learning a lot more about investing and the power of compounding, etc... I'm definitely trying to bring more women into the blockchain space to help out.

I'd never once considered that even if pay were equal, there would still be an outsized portion of rich old dudes controlling capital.

The pay thing might not be quite what it is reported to be. However, what would be an interesting thought experiment, calculating how long it would take if all things remained equal, except the risk tolerance was reversed.

And yep, I think part of the reason men can do with less is also part of the risk thing. Maybe men are more able to be uncomfortable - though women can definitely take more high-end pain :D

Everyone needs to improve their financial knowledge in the next generation - hopefully we are helping them :)

I'd say more able to be uncomfortable, more able to make a decent wage with less and honestly, currently more able to generate disposable income to get back on their feet quicker - since I'm sure pay is not equal across all sectors in all countries.

I love the idea of that thought experiment... the world could potentially be a very different place with more equal distribution of capital... different projects funded, different problems solved. Could be extremely interesting to just tweak a couple of numbers here and there.

different projects funded, different problems solved. Could be extremely interesting to just tweak a couple of numbers here and there.

For sure and it all comes down to financial literacy. My daughter will have it, if she knows nothing else :)

It is very shocked news. Woman can't be free if they can't hold their own economy in their own hand. We the man should give woman proper opportunities so that they can manage to do.

We the man, aren't much better on average - but we have to do better at teaching financial literacy to everyone.

You are right. It is our hard and fast responsiblity to women in our society.

Me reading the title: is that a man who is eating a woman or a woman who eats men?

take that any way you like

I am glad that someone brought this up :D

Had to be the person that can’t make any sense out of financial themed posts 😅

;D

Do you remember the "man eating Fish" advert? I think it was for Hungry Jacks.

I do not, I have never really watched much anything x_x I'll try to remember to look it up XD

It used to be that the woman took time off to bear children, take them through toddler years and then, maybe, go back to work.

Those days are over for the most part.

I think every woman alive should, at the very least, learn and know how to be independent. Also, I think the dynamics vary from household to household on what the paychecks cover and whose will cover it, or I believe it should be pooled and have separate courses of how to save.

I like the Rules of 72 and the entire article. Thank you! I hope you don't mind, but, I sent it to a half dozen relatives with credit to you and an invitation to join Hive. ;)

Those days are over, but the risk aversion still persists. It is likely genetic, at least partially. However, I think that knowing our "weaknesses" (strength under different circumstances) allows us to consider our behavior, rather than run on autopilot.

I don't mind you sharing at all. When I have a chance, I will edit a few things I missed whilst writing :)

I like the title 'Man eating Women' which you relate with economical freedom of both gender. The percentage of womens i think always be little behind in terms of financial management and sometimes Human conservative and weird mind is most responsible who rarely allow them to live a life with full freedom. Recently Afaghanistan crisis where women are enforced to live like how they used to in last 500 yrs ago. The mentality of men will never be full supportive to women side otherwise all the human gender are equal proportion legally to take his/her financial decesion.

I don't understand why people don't want women to be equal other than insecurities. But, I also don't get why people think equal means equal in all things - we each have different skills that we can utilize, regardless of sex, gender, age, body type etc...

Those who never want to take the risk put the money into banks. If we consider the tax cut, the interest revenue would be much less.

interest revenue is negative, as inflation is far higher than interest earned. In Finland for example, the interest rate on savings is 1/10th of the inflation rate.

Then, the saving rate of households should be good there

?

low interest rates means there is no point in savings - it also means people can borrow more for less. Savings aren't good, they are getting worse in many ways, as people buy TVs and cars on credit. Some are saving or investing more to up the averages, but something like 25% of Australians have less than 1000 dollars in the bank.

Yes, that's why they direct people to spend, e.g. Japan.

Interesting point of view. for example my wife portfolio just reached £110. Next step, 1000.

Posted via proofofbrain.io

I am hoping that these lessons won't be lost on my daughter when she is ready.

Let's use the quick and dirty Rules of 72, which I love!

I hate this rule so much. Nice article. Loved your statistics. Got me imagining and using my self, friends and family to get my imagination straight.

You hate it? :D

Got me imagining and using my self, friends and family to get my imagination straight.

This is what I do all of the time - it is useful for me and hopefully it is for you too :)

I meant I hate the rules of 72 because it just shows just how long it takes for our money to get doubled which is a long time.

Ah, well in crypto, 400% in a year is pretty easy in a bull market :)

Exactly. Higher risk, higher rewards

I think more women need to learn about how to manage finances. In most places like even my country, it isn't a priority to women.

it isn't a priority to women.

It is a problem, isn't it? How can a person be independent if they struggle to manage their own economy?

Well, I don't think most ladies here want to be independent, they like the idea but it is easier depending on a man.

It might be easier at times, but over time, I suspect it creates far more problems. Everyone should try to be independent, then help others too.

It does create a truckload of problems. Indeed everyone should be independent.

Well analysed post...

I can't say much.. I really feel like typing more but I think I am good

I spoke to my either some minutes before reading this post and she told me she had some shares she bought for me spoke 40 bears back and I asked how much she bought them.

Then she told me it was my father that bought it for her.

Long story short most women do not like risk, or should I say they don't get the knowledge enough to risk comfortably

The average woman in my country feels crypto is online and you can't withdraw it.

Some just say crypto is too volatile so they rather keep their money in the bank.

The analysis made so much sense

Financial education is sorely needed, yet people don't seem to spend much time worrying about it.

I can't get why... Anyway I hope people start taking their finances seriously

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