The number of women taking control of their money and participating in the financial industry has seen a robust increase in recent times. This has also led to more investing in mutual funds, according to a recent research on trends in women’s savings and investment patterns by Nippon India Mutual Fund.
According to the research, mutual funds are among the top three investment choices for women investors across age-groups, though it is more pronounced in the 18-26 years age-group. A huge 66 per cent of women investors in this age group have chosen mutual funds as their top investment choice.
As for the mode of investment, systematic investment plans (SIPs) are the most preferred option for most women investors. According to the report, about 49 per cent of respondents chose SIP as their preferred mode of investment, while 25 per cent preferred both SIP and lump sum investment.
The research further revealed that women investors across age-groups are inclined to increase their allocation to mutual funds over the next five years. Also, women in the below Rs 5 lakh income bracket have shown the maximum interest towards increasing their allocation to mutual funds. This also highlights the leading role that systematic investment plans (SIPs) play in the popularity of mutual funds as an investment instrument, the report said.
The survey was conducted across geographies and demographics and it included both women investors and non-investors in mutual funds.
Here are some of the key findings from the report.
In terms of their bullishness regarding the mutual fund industry, women in the 27-34 year age group appear most positive. A huge 60 per cent women in this age group plan to increase their allocation towards mutual funds by 6-10 per cent over the next five years.
In fact, this segment of women investors manage to invest the biggest portion of their income as compared to other segments. Majority of women in this age-group are currently investing 31-50 per cent of their income, as against 10-30 per cent in the other categories.
The research also threw light on an interesting correlation between women’s mutual fund investments and participation in financial planning.
A huge 71 per cent of women investors participate in the financial planning and decision-making process at home, as against 42 per cent women from the non-investor category.
Further, the distinction between investors and non-investors came across as stark, when considering the perception of women in their periphery.
According to the report, 49 per cent of women investors, as a part of the survey, were more aware about mutual funds and had started investing as against only 26 per cent of women from the non-investor category of respondents. A higher percentage of women (46 per cent) who had started investing, belong to the 18-26 year age group, the report said.
On the aspect of starting young, a whopping 95 per cent of women investors started their journey below the age of 35 years, the report said.
According to the report, this interest in investment was triggered by a variety of factors, such as a focus on growing money for the long-term, availing of tax benefits, and generating quick returns, among others.
Findings further revealed that women across age groups took up investing to ensure financial security for their families, even as retirement planning came to fore with increasing age. Of the total women investor base, 65 per cent strongly agreed that mutual funds can successfully fulfil their goals, the report said.
In terms of the risk sentiment, non-investors considered mutual funds across all categories risky.
Among the high-risk category, a majority of women (44 per cent) considered equity as high-risk, while among the moderate risk category, 57 per cent considered hybrid funds as moderately risky.
In the low-risk category, gold funds were largely considered low-risk options. The divergence in risk considerations of women across age groups also indicated a need for more education and awareness about various product categories, the report said.
The research also highlighted the top three challenges that women faced while investing in mutual funds. These were namely, limited understanding of the products, having too many existing responsibilities to focus enough on financial goals, and some scepticism about the returns.
According to the research, digital platforms did make investing easy. A majority of women investors below the age group of 43 years preferred new age platforms to invest in mutual funds.
The research also highlighted certain aspects which can go a long way towards making women more comfortable with investing in mutual funds. While 54 per cent women sought better advice from their financial advisor/distributor; non investors were keener on getting information on mutual funds (44 per cent) as compared to investors (34 per cent). Further, 42 per cent of the non-investor base sought readymade products or product baskets to make their investment journey simpler.
At present, women across the investor and non-investor categories were receiving investing advice from a variety of platforms (52 per cent from social media), 47 per cent from TV, 45 per cent from financial advisors, and 40 per cent from Internet search, the research said. According to the report, financial advisors were preferred across income levels, with 54 per cent investors getting information from their advisor/distributor.
According to the report, the research brings forth a variety of interesting perspectives on women’s saving and investing journey in India, while also depicting the enormous potential for future growth. It not only highlights current investment patterns but also spotlights changes in women investor allocations over the next five years.
Sundeep Sikka, executive director and CEO, Nippon India Mutual Fund said: “We believe that women investors will play an integral role in the expansion of the mutual fund industry. We are steadily witnessing increasing participation from women investors and our survey is a step towards understanding how we can make their investing journey more fulfilling”.