The Buyt Desk
According to a statistical report, women on a worldwide average, earn 23% less than men for the same work. Until there is equality between men and women, it is crucial for women to smartly invest their hard-earned money. If you don’t know when to invest and how here is your ultimate guide.
Reasons Women Should Start Investing
Investment is a great source for increasing their income. Saving some of your income monthly and putting it in markets would help save money for various things. For example, education, vacation, vehicle, etc.
Not only working women but household women who stay at home and take care of their families must also consider investing. It will help them in earning profit for long-term goals such as securing children’s educational careers, purchasing a home, etc.
What Is The Right Time Women Can Invest?
The earlier you start better you are. An early start of investment gives you the benefit of compounding returns. This principle is the basis of financial planning.
What Investment Options Are Good For Women?
If you are investing for the first time, opt for the way that serves you with the better ROI (return on investment). Co-managing household responsibilities and work make it difficult for women to monitor their portfolios on a daily or weekly basis. However, some women want to review their portfolios more often. Since all investment portfolios are not the same, it is significant to consider the time you can commit while choosing your investment options. for women.
Let’s discuss investment options that are better for women.
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Exchange Traded Funds or ETFs
Exchange Traded Funds is a basket of securities that consider the world of assets. It includes stocks, equity, commodities, currencies, debt, or bonds. An applicant can purchase a share of the basket similar to the process of purchasing the company’s shares. These are operated on the stock exchange and provide the simplicity of trading stock with different pros of mutual funds.
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Mutual funds
This investment option is good for all types of investors including seasoned or beginners. Women require an instrument to easily and efficiently distribute their funds depending on their goals. A new investor should start with a SIP (systematic investment plan) to invest a specific amount of savings monthly. It will help you to stay committed to your strategy of investment.
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Stocks or Equities
This investment option represents the company’s fractional ownership. Buying a company’s share means owning a certain or small section of that company. Many leading brands allow people to purchase and sell their stocks. But, it is considered a highly risky asset class because its volatility is sometimes related to the stock performance. You might be wondering why choose this investment option.
The company’s price per share is associated with multiple parameters including the company’s balance sheet, leadership, etc. Even stocks can produce great returns. Depending on how prices can fluctuate on a specific day, investments may not be perfect for every woman. It will need more attentiveness and active rebalancing which can be time-consuming.
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U.S. Equities
Diversification is important in the portfolio of any woman. Investments in US equities or foreign equities offer different advantages in one’s portfolio with the chance for rupee hedging. Hedging a rupee is significant when you require additional funds to spend when organizing a party in Europe.
LRS or liberalized remittance scheme of India allows women to invest in U.S. equities abroad from their home comfort in India. If you don’t prefer direct investments in this scheme, you can consider feeder funds in asset management companies (AMCs).
Note that investments can be age subjective. With increasing age, there is a possibility that risk appetite will fluctuate.
Young working women can consider assigning their portfolios to worldwide ETFs, global equity, and domestic stocks. Compared to FDs (fixed deposits), these asset classes are more costly. Any short-term losses can be regained as you have age on your side.
Investment Mistakes To Avoid
Analyze past common practices to prevent present and future mistakes.
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Depending On Your Partner to Manage Investments
In India, many women depend on their spouses to make all the investment decisions. Women take a backseat in terms of money matters. To become independent, do your own research and make an investment portfolio of your own.
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Risk Aversion
Compared to men, women are better risk managers and highly patient investors. But, investing highly conservatively could also affect your long-term performance. This may eventually result in losing higher returns.
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Prevent Going Overboard With Gold
Don’t go overboard with purchasing gold and try discovering other investment opportunities to differentiate your portfolios. It will assist you in emphasizing financial assets rather than physical assets.
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Avoid Keeping Higher Amounts in FDs or Bank Accounts
Keeping too much amount in fixed deposits or a saving account doesn’t work more efficiently because of their low-interest rates. Such an amount may even not help in beating inflation. This may result in negative growth. So, use FDs or savings accounts just to keep some contingency funds and liquidity. Use the rest for investment in growth funds.
Conclusion
When you age, you may start thinking about retirement. You would most probably take on less risk initially when you understand that a constant income stream from a job will not be assured. It is important to protect your capital. Consider a blend of short-term to medium-term bonds, FDs, and blue chip in the equity segment. Make an informed investment decision by choosing an option that better fits your income, risk, and goals.
