A majority of women today cannot take financial decisions and look up to their counterparts. To ensure a healthy nation, they must start investing
Over the years, the strategic and influential role of women leaders in the modern economy has increased manifold and they have started contributing to the economy. They have become significant for the advancement of a nation. However, even today, a majority of women are not involved in the financial decision-making process and leave it to the men — their fathers, brothers or husbands. But all of this can change as women are economically independent and have been taking the responsibility of their earnings and investments. With inflation and taxes eating up a chunk of one’s salary, savings alone are not enough to meet financial goals of a family. One needs to invest in order to get the best returns. Investments must be linked to goals. So, women have to become savvier about savings, taxes and investments, when compared to old times. In fact, financial needs, and, therefore, investment options of women are also different. When compared to men, they have more breaks in their careers, maybe due to marriage, child birth and because they have to take care of their children or the elderly.
In addition, there is also a rise in the number of single women. Women need to be financially literate in order to stay financially independent and ensure that their goals are always in line with that of their family. So, is there an age when women should start looking at investments? Actually, there is no particular time to start saving or investing. The earlier one starts, the better it is.
In your 20s: At this stage, most women choose their career path, which sets the tone for their future. This should also be the time for them to set the tone for investments. One of the basic tenets of investments is to start early. Equities can be a good investment choice in the 20s as one can take more risk when he/she is young. A young woman can choose to invest in equity mutual funds for long-term goals as mutual funds give one the benefit of professionals managing the money. Every working professional will retire sooner or later. Young women in their 20s can open a Public Provident Fund (PPF) account where she can start investing from as low as `500 to a maximum of `1,50,000 per year. These are the least risk investment products.
In your 30s: At this age, women are usually married and some might even have children. Besides, they have the additional responsibility of caring for the family. Women must remain invested in mutual funds and must also hold life insurance policies. One life insurance policy for each earning member in the family is a must. It is also important to invest for the child’s future. Systematic Investment Plans mutual funds are a good way to start. A mother should opt for the Sukanya Samriddhi scheme, which provides higher interest in order to save if she has a girl child. This is also a good time to invest in real estate or buying a home as well and enjoy the multiple benefits of long-term security, tax benefits, hedge against inflation, and in some cases, rental income. Some banks also give concessional interest rates to women in case they want to avail loans. Women should make the most of it. This is also a good time to invest in a suitable health insurance plan, which will take care of medical emergencies. Having sufficient money market funds or liquid funds is crucial to help tide over emergencies.
In your 40s: This is a time to think more in lines of capital protection than capital appreciation. So, fixed deposits should be the flavour as it helps in getting assured returns and one can use them to take loans as well. Most women and their spouses think about funding their kid’s higher education. If one hasn’t saved enough, they can take educational loan. This loan gives one tax benefits under Section 80E of the Income Tax Act. One should never use the retirement savings to fund one’s child’s education because it will be difficult to rebuild those savings. Once one has used his/her savings to fund some goals, the money used should be redirected to the retirement savings. Another important point is that some women buy gold jewellery as they consider it to be a good investment. Gold jewellery doesn’t have great resale value because of wastage and other charges. Investment in gold should always be in the form of coins or bars. One could even invest in gold mutual funds.
In your 50s: As one nears retirement, he/she should start moving some of the risky investments to safer avenues like debt mutual funds. But women shouldn’t give up investing in equities yet, and have a small portfolio of their investments in equities to beat inflation, which will most probably have a huge impact on savings once they retire. Investing in Senior Citizen Savings Scheme or fixed deposits for senior citizens upon retirement can also be beneficial. It’s high time that women start investing smartly so that they can gain from higher returns and ensure stability for their financial future and in turn, become the backbone and strength of our nation.
(The writer is Assistant Professor, Amity University)
