By Shweta Khanna Bhandral
Investment is as essential for women as it is for men. Working or a homemaker, every woman should invest their savings for themselves. There are multiple reasons why women should take charge of their investment. Indra Nooyi, the former CEO of PepsiCo, said, “in a women’s life two clocks run opposite to each other always. One is the biological clock and other the career clock.” Hence, married women usually take more job breaks, and they should be financially ready. Managing money is not only essential to deal with unforeseen circumstances that the family might get into like a loss of job or business but also personal reasons or loss.
Let us look at the top investment options for women:
Retirement planning is one of the most important goals for every investor. It is also a goal for which one must accumulate a large corpus. Therefore, women must start investing in this critical goal early to benefit from the power of compounding. It is equally important to choose the right asset class to stay ahead of inflation. Also, this would require spreading your investment in various asset classes.
Personal Provident Fund is one investment tool which, as of today, is giving most promising returns in debt investment category. The current interest rate on PPF is 7.1% compounded annually. Since the government backs the PPF, the risk involved is minimal. It falls under EEE status, which means that the amount invested, interest earned, and maturity amount received are all tax-free.
Many investors opt for pension plans and ULIPs for their retirement goal. But equity and equity-oriented funds (including retirement funds) have the potential to deliver higher returns. Stereotypes in society and our minds might say otherwise but several pieces of research done over the last few years prove that women make better investors than men. A STEM connector report found that women earn 12% higher returns than men when it came to individual investments. An integrated approach also drives women to more meaningful financial goals. Women also tend to see the big picture, which is an essential pre-requisite for investment.
Another survey conducted by an investment platform Grow where 26 thousand women participated found out that 82% of women prefer Mutual funds and stocks for investments. Personal finance expert, Hemant Rustagi also advocates investment in Mutual funds as a retirement plan. He says, “The key is to choose options that have the potential to deliver higher returns during the accumulation stage and generate tax-efficient regular income during the disbursal stage. Opting for Systematic Withdrawal Plan (SWP) is one of the most tax-efficient strategies to generate regular income from mutual funds. Now that dividend from mutual funds is taxed in the hands of investors, women in higher tax slabs will end up paying higher taxes if they opt for this option.”
Direct investment in the Stock Market is also a good idea if you have the appetite for it. A portfolio created with thorough research can give you good returns in the long term than most of the asset classes.
One of the asset classes that has a place in everyone’s portfolio is Real Estate, especially a house for personal use. With an increasing number of Indian women, both married and single, contributing significantly to the decision-making process, the number of women house owners is increasing. Though in a lot of cases, the house is registered on a women’s name to enjoy the benefit of lower registration cost. It is undoubtedly an excellent idea to own a personal space married or unmarried as provides stability and security. However, before committing to such a large investment, one must ensure that other essential goals like retirement planning, medical insurance etc. are in place.
Personal finance expert Hemant Rustagi says, “buying a property from an investment point of view is not a great idea as one has to compromise on liquidity. Besides, equity as an asset class has the potential to deliver higher returns over the longer term.”
Gold is another asset class considered suitable for women in India. Traditionally in most of our region’s girls are given gold in marriage, so that they have some asset of their own in the new house. Gold ornaments are worn, used, and when there is need can be mortgaged or sold. It is considered among the top investment options for a women and a good asset class for the long term.
If an investment is needed for short-term goals like house repair, child’s education or even buying a car, women can invest in some small saving schemes. For such requirements, one can opt for Post office Time deposit Scheme and the National Saving Certificate (available at the post office). Both these are time-bound. While in the Post office time deposit Scheme one can invest for anytime between 1 year to 5 years and the interest is calculated accordingly, in NSC your investment gets blocked for five years at 6.8% of interest compounded yearly. Though the interest rates on fixed deposits are lowest in the last ten years, an RD or an FD is also an option for short-term requirements.
With more women working and earning even in smaller cities and villages, they must know how to manage their finances and become part of the financial system. It will not only help them but also help the economic growth of the country.
