3 nuggets of financial wisdom for women

Key takeaways

• Financial prudence and smart investing are crucial for the financial independence of women.
• A financially secure future starts with thoughtful planning and equipping yourself with knowledge that transforms savings into profits.

Women have achieved remarkable strides in every domain from sports to entrepreneurship, and beyond. From business stalwarts like Kiran Mazumdar Shaw and Falguni Nayar to the Phogat sisters, women have made their mark in global arenas and showcased India’s progressive thrust towards empowerment.

However, we haven't yet achieved pivotal benchmarks that guarantee equal opportunity and freedom of choice to women across strata of society. A survey conducted by Tata AIA indicated that over 56% of women who are employed are dependent on their partners for financial planning.

Additionally, a report published by the Research Journal of Finance and Accounting reveals that women tend to invest more conservatively than men, due to which her portfolios do not grow as quickly as his. Much of the hesitance is a result of financial insecurity and a lack of relevant information

As a result, financial planning for women is a subject that demands interest to achieve financial independence. Regardless of socio-cultural nuances, income level, and age, a foundational literacy of personal finance is the cornerstone of achieving fiscal security and inclusivity for women.

Tip 1 - Look Beyond The Conventional

Firstly, it's important to address that investing motives should not be deterred by age biases. Whether 16 or 60, saving money and making wise long-term and short-term investments will aid women in creating wealth and building a hedge of security around their lives.

Choosing a mix of investment options, determined by current commitments and circumstances, will help you be resilient and financially healthy. For example, Peer-to-Peer lending through platforms like Bharat Pe’s 12% club may deliver better returns compared to conventional fixed deposit schemes.

Tip 2 - Your investments should reflect your goals

Setting healthy financial and lifestyle goals not only builds expectations for growth but also helps women define a more predictable and safe future. Whether it’s buying a house or jewellery for your wedding, the amount of capital you choose to invest depends on your present financial commitments and goals including the following -

1. Net income
2. Debt repayment / EMIs
3. Investment Objectives
4. Risk
5. Time horizons

Contingent to the factors above, you can choose from a plethora of investment options to grow financially in a timely and structured manner.

- Gold

The rare metal is an important component of a diversified portfolio. You can expect much volatility in the short term, however, gold has always maintained value and upward pricing over the long term.

- NSC

The National Savings Certificate is an investment option backed by the government and is ideal for making short-term, small, risk-averse investments. As of February 2024, NSC offers a 7.7% rate of interest per annum.

Tip 3 - Start as early as possible

Investments, especially for the long-term, yield a better return the longer your money is circulated. Simply put, the earlier you start investing, the more wealth you will be able to accumulate to reach your financial goals. Furthermore, starting early will expose you to the true power of compounding, which occurs when earnings get reinvested to earn more

For example, investing a paltry Rs. 200 per month from the age of 25 will help you reach a milestone of Rs. 10 lakhs by the time you turn 65. Should you be delayed by 10 years, you will have to invest Rs. 500 per month to reach the same milestone. Investing at 45 years of age will mean you now have to invest Rs. 1500 or more to reach the same milestone. (considering reinvestment and a 10% annual return)

Another benefit to starting early is that you will enjoy the wiggle to make mistakes and improve your investment with fewer liabilities to worry about.

Conclusion

Taking charge of your finances and managing your money efficiently will result in faster and safer wealth generation. Set an example to the women around you who hope for financial security and independence to live a fulfilling life.