A share portfolio instead of flowers

Sunday is Mother's Day. We thank our mothers and ignore the fact that career breaks and part-time work lead to significant losses in income and pensions for many women. The German Stock Institute is calling for better conditions for financial provision and urging women to take active steps to secure their financial independence. Targeted investment in shares is an important building block for retirement provision and wealth accumulation.

"We want to encourage mothers to take active steps to secure their financial independence and to take advantage of investment opportunities in shares and other securities for retirement provision and wealth accumulation. A stock portfolio instead of flowers” is the motto for Henriette Peucker, Managing Director of the German Stock Institute. This is an individual responsibility, but also a task for the federal government. ’Strengthening the role of equity investments in wealth accumulation and in the pension system is a high priority for the new federal government, especially in the interests of mothers.’

When women become mothers, they often take a break from their careers and usually receive parental allowance. When they return to work, they often work part-time with correspondingly lower pay, in many cases for years. According to the Federal Employment Agency, in 2024, for the first time, more women were employed part-time (50.3 per cent) than full-time (49.7 per cent). Only 13.4 per cent of men were employed part-time. This leads to a pension gap for women and an increased risk of poverty in old age. Last but not least, career breaks often go hand in hand with a career setback, which is why many women do not advance to higher, better-paid positions. This in turn has a negative impact on their pension entitlements.

This makes it all the more important for women with families to take an active approach to their financial planning. ‘Building up assets is not only important for retirement provision, but also for financial self-determination,’ says Peucker. Regular saving through long-term, broadly diversified investments in equities, equity funds or ETFs, with an average return of 6 to 9 per cent per year, is a suitable instrument for retirement provision. Those who follow these basic rules and only invest money that they will not need in the immediate future will always benefit in the long term and will not have to worry about price fluctuations.

Unfortunately, the shareholder numbers from the German Stock Institute for 2024 show that the number of female share investors has fallen by around 300,000 compared to the previous year. Last year, there were 4.4 million female share investors compared to 7.7 million men with share investments. 

‘This is a clear signal to politicians not to leave women alone with this structural problem,’ says Peucker. “Appropriate framework conditions are needed, including, in particular, the promotion of equity-based pension provision and the introduction of a tax-advantaged investment savings account for wealth accumulation.” An investment savings account is a wealth accumulation instrument that can have a big impact even with regular savings of small amounts. The investment savings account model has been used very successfully in many countries for years.

For example, anyone who has invested £50 a month in a savings plan for equity funds or ETFs on the FTSE over the past 30 years has set aside a total of £18,000. This has grown to £66,000, which corresponds to a return of 7.6 per cent.