Financial Independence for Women: top investment tips for the other half to make them independent moneywise

Financial Independence for Women: Financial independence is very important for all and more so for the remaining half of the population which is the women. In this special edition of Money Guru, Zee Business’ Swati Raina speaks to Prableen Bajpai, Founder Finfix Research and Shweta Rajani of Anand Rathi Wealth Management to know investment preferences of women and where they must invest to optimise gains. The show has been designed to prepare women for taking informed personal finance as India celebrates its 75 years of Independence.

Financial Planning for women

Where do women generally prefer investing?

Financial independence for half of India’s population

Women in financial sector

Improvement in gender gap on a global level

Pay gap in India in financial sector at 18 per cent

In certain areas, gender pay gap as high as 26-28 per cent

At global level, women as unpaid labor more prominent

Financial independence of women

Challenges

- lower participation in financial decisions

- behind the curve in financial literacy

- lower participation in workforce

- Gender pay gap a big issue

- career break due to personal reasons

Finfix Survey - Investment Preference of women

Fixed income like FD, PPF among major instruments for investment

59.4 per cent share in fixed income instruments

Prefer buying physical gold

At lead 48 per cent women depend upon men for their financial decisions

11 per cent women take help from financial advisors

Goals largely related to retirement, children education

Women now more keen on being self employed

36.5 per cent women do not have their own savings

Why Investment important for women?

- career break

- Small work span

- gender pay gap

- long life expectancy

Investment habits of women

- Expences around their children

- low risk appetite

- very calculated while doing investments

- don’t take investment decisions on impulse

- Not greedy about returns

- prefer investments in physical gold

- take keen interest in buying gold jewellery

Can earn handsome income from investment in other gold instruments

Sovereign Gold Bond is a good option to invest in gold. It is safe and offers 2.5 per cent interest on investment
Gold Mutual Fund and Gold ETF are other good options but fraught with risk.

Women must take care of their health

Term plan necessary for single mothers
Health insurance also necessary for unmarried women
Married women must take health plan and critical illness plans as well.
Include maternity benefit plan in health plans

Money tips for Women

- Set financial goals

- Set income to investment ratio

- First investment and then expenditure from income

- Make monthly budget

- Invest in right asset class

- Target long term - 80:20 equity-to-debt ratio

- Medium Term - 70:30 equity-to-debt ratio

- Take adequate health and life insurance

- make emergency fund

- review your portfolio

- be financially aware

Formula for Financial Independence

Save something from each month’s salary

Save at least 20 per cent income

Invest the saving amount at the right place

The income will not increase just by keeping it into bank account

Invest your money where the income can beat inflation

Optimise benefits by investing for long term

Investments in equity will give higher returns over a long term period.

Sooner you invest, higher is the benefits of power of compounding

Gradually increase the amount of investment

Never stop investing at any cost.

Where to invest?

Invest in equity via mutual funds

You can begin by investing in good large cap funds

New investor can invest in index fund

Diversify your investments

Invest for small duration in debt funds

Make gold a part of your portfolio

Investment in gold must not go beyond 10 per cent of your total investment capacity

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Avoid these dependencies

Try to remain free of debts

Do not use your credit card too often

Avoid having too many credit cards

Taking personal loan should be at the bottom of your priority

Higher rate of interest on personal loan than secured loan

Avoid investing if returns are low

Don’t run for options which promise immediate returns

Invest as per your goals