Women across spheres of life are liberating themselves from old world traditions and venturing into new avenues on both the professional and personal front. Women scientists have been the core of India’s indigenous space agency ISRO, to quote a recent success story. Apart from striving for liberation and freedom, women (working or dependent) should set their sights on financial independence and actively participate in planning for goals such as a new home, child’s education or marriage, medical exigencies, and retirement. Under Mutual funds she can find a financial ally offering professional money management and various investment avenues based on their individual risk return profile and investment horizon.
Saving is second nature of women, be it stashing away a portion of the household expenses for exigencies or negotiating a bargain for each expense. Though they are inclined to save, the underbelly is they don’t invest. A woman investing Rs 1,000 per month of her savings for the last 15 years (12,000 x 15 yrs = Rs 1.8 lakh) in equity (Nifty 50), would have built a treasure trove of Rs 3.5 lakhs at an assumed annualized return of 8 per cent. This opportunity was lost by letting cash idle away at home or investing in a haphazard way in low-yielding-fixed income instruments. A scientific goal-based approach involving mutual funds can help them fulfill their needs and mitigate risk.
Benefits of investing in mutual funds
- Professional fund management
- Wider Choice
- Tax savings
- Smaller initial investments and regular investing via Systematic Investment Plans (SIP)
Long term goals – Goals of retirement planning, child’s higher education or marriage have a long gestation period of 15-20 years. This long term horizon benefits equity investment, and women can use equity mutual funds to build a bigger corpus in the long haul. Rather than investing at one go, they can use their habit of stashing money on a regular basis via systematic investment plans (SIPs) into mutual funds to avoid inept investment timing and benefit from market gyrations.
Medium term goals – Debt mutual funds can be a good investment opportunity for goals such as vacations, sabbatical from job wherein various options are available based on the maturity and risk profile of the underlying investments. Investors should choose debt mutual funds based on their risk appetite and investment horizon.
Short term goals – Women would as everyone also need liquid money available for any short term need such as exigencies, etc. While most would prefer the money to be kept in savings bank account, it would be better if they park a portion of this money in higher yielding and comparably safe and redeemable liquid funds.
Points to remember:
- Invest for individual financial freedom
- Use your savings habit to good use
- Follow a goal-based approach, mutual funds can be a good ally
- Invest across equity, debt and liquid mutual fund based on your goals and risk profile
An Investor Education & Awareness Initiative
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With inputs from Crisil
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