Women are fantastic as they excel in every ecosystem. They’ve made their mark as mothers, sisters, professionals, leaders, and even astronauts! They are courageous as well as agile and easily adapt to changes very swiftly. Despite participating in all spheres, studies show that women, even if financially independent, do not make their own investment decisions. They think that they do not understand finance or investments or that the men in their lives are more adept at making these financial decisions for them.
I would like to say that whether you are a working professional or a housewife, you are great at saving! The tendency and ability to understand the needs of the household and run expenses day-in and day-out is what makes them financially prudent. You can be good investors if you spend time understanding various investment products and apply them for a financially independent future. Also, I urge you to ask basic investment-related queries to your financial advisors. Make sure you understand the fine print before investing.
Financial security is crucial for all women to ensure emotional security and an independent future. A great way to navigate through this is proactively undertaking the following practices that will help you evolve into a more confident and secure woman:
Always save (at least) a part of your monthly income.
Investment for the long term:
For women who earn but do not have retiral benefits invest in the Public Provident Fund (PPF) - up to Rs 1.5 lakh per annum. The interest on the corpus is tax-free and with the power of compounding, the corpus will increase over a long period.
The New Pension Scheme (NPS) is another avenue. The money is invested in t equity/debt markets in the proportion desired by the contributor. On retirement, the corpus can be converted into an annuity. There are tax breaks as well.
Mutual funds are investment vehicles in which the investor can earn good returns over the medium to long term. This income can be utilised for holidays with friends and family, buying some long-awaited gifts or saving for big events like marriage/education, etc.
There are several postal schemes like National Saving Schemes (NSS), monthly income schemes, and bank Fixed Deposits (FDs) which ensure fixed returns while keeping the principal safe. Bank FDs are especially useful for small emergencies where one may immediately need cash.
Most women love gold. They buy physical gold in the form of jewellery and then keep it in the locker where it remains forever. An alternative would be to purchase Sovereign Gold Bonds (SGB) issued by the Reserve Bank of India at the prevailing gold price. Deposit it in a Demat account. The Government also pays interest on it and there is no capital gains tax on maturity- where one gets the prevailing price of gold at the end of eight years!!
Property is also a good investment and a necessity. Therefore, it is advisable for couples to jointly purchase it. This enables both partners to avail tax benefits while owning property. This also leads to building a better partnership with the spouse.
A life insurance policy is a must for a woman and the family. It will secure the family in case of a mishap.
Due to Covid-19, the need for insurance has been highlighted more than ever. A family floater should be a part of the investment package. The government also extends tax benefits for it. Parents or elder family members should also be covered under this since they are likely to utilise it more often.
Make sure to imbibe the following habits to help secure a better financial future
Investments should be well-diversified in various asset classes discussed above
Long-term investments should not be monitored daily
Do not get perturbed by the vagaries of the market- especially when the value of the portfolio decreases in the short term
Use the services of a professional investment advisor from time-to-time to rebalance your portfolio with changing needs and valuation of the portfolio.
Update investment records regularly. This helps stay updated on the current value of investments. Keep the insurance policies and certificates carefully to find them easily when required.
A calendar of Systematic Investment Plans (SIPs) and annual payments should be made. This ensures that you don’t miss any payments, especially insurance policies lest they lapse.
Always invest in regulated entities only as mentioned above and not in chit funds etc which are managed by fly-by-night operators.
Financial independence is of paramount importance. Overseeing your finances empowers you to have a more secure future. Wishing you a happy & financially empowered International Women’s Day!
The author is CIO at IndiaFirst Life Insurance Company
DISCLAIMER: Views expressed are the author's own. Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.
