In the Saudi stock market, women make up 26% of investors. What are the causes of this low proportion, and what suggestions are there to raise it?

Through conversations between female friends and colleagues, I realized that the majority of women spend their salaries in a consumptive manner instead of dividing it between spending, saving and investing, which prompted me to ask why do the rest of women not invest? At the outset, let us agree that today there are female investors in the Saudi market. As indicated by the statistics of the Capital Market Authority ending in the year 2022, the number of individual investors was 5.8 million individuals, of which 1.5 million are females compared to 4.3 million males. Therefore, approximately 26% of the individual investors as of December 2022 are women compared to 74% of individual investors are men.

The low number of female investors is due to a variety of factors, including:

1. Historically, in society, there was no financial responsibility for women in the past, so preserving income or developing wealth was not a concern for some women.
2. Inequality in salaries, for example, in some private institutions, women’s salaries are lower than the salaries of their male peers, and therefore the low level of income calls for a low ability to take risks, as these small differences in wages multiply their impact with time. Average wages today, based on data from the General Organization for Social Insurance the salary of a male in the private sector is approximately 8,393 Saudi riyals, compared to the average income of a female in the private sector, which is 5,058 Saudi riyals in 2022. That wage gap went through several stages, as it was in 2016 77%, when the average salary of a male in the private sector was 6,705 Saudi riyals, compared to the average female salary, which was at the time approximately 3,797 Saudi riyals. The salary gap reached 82% during the year 2019, but it decreased in 2022, down to 66%.. due to the entry of more females into the labor market and the adjustment in salaries. Today, the participation of Saudi women in the private sector constitutes 39%, i.e. 855,000 Saudi female employees in the private sector, which is the highest level since 2005.
3. Complementing the reasons, the third reason may be the lack of knowledge of some women on how to begin investing and whom can take the following steps:

The first step to start investing is by opening an investment portfolio with well-known entities licensed by the Capital Market Authority that provide investment services such as brokerage, for example but not limited to the investment arms of banks. These services are readily available through their official websites without the need to visit the branch.

After opening the portfolio, the investor has several types of assets that she/he can invest in, such as stocks, sukuk, bonds, and listed real estate investment trusts

“REITs.” The investor then has two decisions, which are either investing directly and managing her/his own portfolio, or investing through professionally managed portfolios, which come in many forms, where we find various funds that include various assets, or that focus on specific investment strategies such as initial public offering (IPO) funds, private equity funds and others. One of the advantages of these investment funds is the professional management of the portfolios.

It should also be noted that the time horizon of the investment plays a critical role, for it should not be invested in an amount that constitutes psychological pressure on the individual, for example, investing in amounts whose time horizon is very short and your need for liquidity is high, for example the availability of short-term cash, as it is said that emotions are the biggest enemy of investment and time is the most important friend.

In addition, some companies provide investment programs for their employees, which is considered one way to motivate and increase investment volumes in general among both men and women.