How can women start their investment journey? All you need to know
There are many roadblocks to investing as a woman – unequal pay, lack of financial knowledge, lack of personal finance help, the burden of the pink tax, feelings of intimidation and confusion, etc!
But the winds are changing, and more and more women are taking charge of investing their money for personal goals, family, and their child’s education.
The conversation about money, wealth generation and the need to start investing early is finally brewing – let’s see how women can start their investment journey.
- Why should women start investing?
- When should women start investing?
- What kind of investments work better for women and why?
Why should women start investing?
Investments are the key to a brighter and financially independent future – whether it’s early retirement or financing your child’s Oxford education in 10 years. Investment can help you attain these goals.
In India, the percentage of women investors is very low. According to Financial Express, only 14% of women are investing in mutual funds and 10% in stocks.
Women in India make the mistake of only investing in Gold or Fixed Deposits. The rationale that these investments are safe and secure prevents them from taking risks and aiming for wealth generation.
With the inflation soaring high, women investors who are earning can start investing as low as Rs. 100 every month. This small amount can benefit from the power of compounding and help them save for different goals like a holiday, a degree, a car, or an emergency fund!
Homemakers who have saved up some money can also invest! Starting a SIP for a mutual fund can help you save for different financial needs and get a greater interest rate than any savings account or FD investment. This can go towards their child’s education or a home.
The great thing about starting a SIP is that you can pause as well as increase the base sum based on your income and savings!
When should women start investing?
‘Right now,’- is the best time to start. Whether you are 18 or 40, investing can start at any time. Starting early does have its set of benefits but that should not stop you from saving right now. Most young investors enter the market in their 20s and 30s.
If you are new to investing, consult a financial advisor. Talk money with your accountant and understand what are your future goals and what is the best route to achieving them. They can help you invest in a bunch of tools that will not any diversify your wealth generation but also make it less risk-prone.
Additional read: How single parents can plan finance?
What kind of investments work better for women and why?
Investments are not gendered; anyone can invest in any investment tool. What matters is your risk profile, investment capacity, and goals. Here are some investments that women can explore:
1. Mutual funds
Mutual funds are a great way to start investing. You can simply begin with a SIP in your favorite fund. This allows you to invest a certain amount of savings every month, this amount is auto-debited from your account every month without the stress of manually investing the sum. Mutual funds are easier to manage than stocks because there is a fund manager to help protect your savings and investments.
2. Exchange-traded funds (ETFs)
An ETF is primarily a basket of assets and securities such as equity, debt, stocks, bonds, commodities, or currencies. You can purchase a unit of these securities, just like buying shares of a company.
ETFs are like a cross between stocks and mutual funds, they are traded on the stock exchange and offer the diversification benefits of mutual funds.
Stocks, known as equities, allow you to own a part of a company. There are shares for TATA, Reliance, Unilever, Nykaa, and thousands more available for investors to pool their money in.
You can pick the company you believe will grow in the years to come. Buying stocks is more volatile and riskier in nature. The decision to buy and sell resides with you.
4. US Market
Investing in US Markets is possible for every investor and a great way to add geographical diversification to your portfolio. There are two ways to invest in US markets direct stocks or ETFs.
This is an opportunity to make the most of the falling rupee and gain returns in dollars. US markets allow you to do rupee hedging; which means you will have more funds by allocating the same amount of money in dollars than in rupee because of the greater value of US dollars.
If you want to make wise investments then get in touch with a professional financial advisor. They can help you understand the value of choosing investments based on your goals, and risk appetite as well as how to shift your funds from one basket to another when the market fluctuates!
5. Investment mistakes to avoid
The biggest mistake a woman can make is not investing! Many women in India shy away from the market because of the fear of risk or knowledge. This decision can be detrimental in the long run and will be a huge hindrance in the face of wealth generation!
6. Fearing loss and not taking risks
Many women and men hurt their chances of wealth generation by playing it safe. They are too cautious and do not allocate enough funds into different assets and lose out on the money they could have accumulated over the years. Thus, don’t be averse to taking risks especially if you have time on your hands.
7. Allowing your partner to make an investment decision
Indian women rely on their partners to make investment decisions for them. To be truly independent, you have to manage your own wealth generation and investment portfolio. Try to be aware of the investments you make and whether they will help you achieve your goals in the future.
8. Putting their money in only physical gold
Gold is a great investment but it should not be your only investment. Indian women spend lakhs of rupees buying gold jewelry as a form of investment but they forget that there are maker charges, storage issues as well as the possibility of loss when reselling the items.
Instead, if you are a gold-lover then look at Digital Gold, Gold ETFs, or Bonds to invest. It’s important to only keep some portion of your portfolio dedicated to gold.
9. Keeping cash in savings accounts or fixed deposits
Saving money in accounts or fixed deposits beyond a limit is counterproductive. Banks do not offer a great interest rate, which means your money is losing value against the rate of inflation in the country. Try keeping some money in the bank while a majority in growth-oriented investments like MFs, PPFs, ETFs, Bonds, etc.
Women in India are gradually catching up! With thousands of investment options, young women and men find it hard to remain neutral on the benefits and risks of investments.
The only way to make money is to invest money. Investing can not only secure your future, but it can enable you. Enable you to send your child to the best schools or enable you to take that Europe trip. Big or small, investing can help you actualize your dreams faster than any form of wealth creation tool.