How Should Women Invest?

In the previous article, I had talked in detail about why Women should invest and things like that. As a continuation, in this article we are going to look at some investment avenues for women.

So, lets get started!!!

Why should Women have a Personal Investment Plan separate from their Men?

It is important that women have a separate personal finance plan from her family, be it her parents or her husband. With changing times the need for separate finances has increased significantly. I hate to say this, but the rise in divorce rates is alarming. The surety of life is also lower with increase in accidents and stress related ailments. If a woman handles her own finances she is well prepared to handle money matters individually if the need arises. Knowledge of different investment avenues, savings and expenses is very important to run a family. A separate personal finance portfolio will prepare a woman to face financial challenges. Also, she will not have to bear a major monetary loss in the event of a divorce.

All the more reasons for women to start investing and have an investment portfolio…

What is an Investment Portfolio?

A Portfolio is nothing but the collection of investment instruments held by an individual or a company.

For e.g., An investment portfolio may include shares, mutual funds, gold, bank deposits etc.
To learn more about Investment Portfolio – click here

Look out for Financial Products that are custom built for Women

The first thing you need to do as a woman is, to look out for financial products that are custom made to benefit the women of the country. These products offer you special benefits and privileges that are not available to us (The Men of the country)

When something is available for you to use it, why not make use of it. Right?

Some of these products are:

Product Name	Provided By	Special Features
Jeevan Bharti Insurance policy	LIC of India	The policy does not lapse in the event of failure to make premium payments for a few years. It covers critical illnesses related to women
HDFC Women’s Advantage debit card	HDFC Bank	1. Cash Back of Re. 1 for every Rs. 200 spent 2. Special discount on purchase of Gold Bars 3. Personal Accident Insurance Cover 4. Free Bill pay facility and other loads of features
ICICI Womens Advantage Savings Account	ICICI Bank	1. 0 balance account with just a RD of Rs. 2000 per month 2. Free multi-city cheque book 3. Free ATM Card and loads of other benefits

There are lot more products that offer special features for women. Keep your eyes open when you ready news papers to spot such offers and make use of them.

Note: I am not endorsing any of the above mentioned products. It is just an example to show the special offers available to women from banks in India.

What should a Woman’s Investment Portfolio Consider?

When an Investment Portfolio is created for a Woman, a lot of extra considerations have to be kept in mind. Most investment plans available in the market are Men Oriented and cater majorly to the needs of the working men of the country. Hence, these products don't suit the needs of a woman.

A personal finance plan for women should include the following:

• Regular Income – even when women take a break from their careers it would be good if they can generate a regular income from their investments. Even if it is only a small or meagre amount, it still counts
• Always Keep an emergency fund – Never touch it unless and until it is a real emergency.
• Time your investments for known expenses likes children’s education or marriages etc
• Track your savings and investments regularly.

The Mantra here is:

Save and invest as much as you can. Create an Investment plan and make sure you stick to it.

Deciding on How Much you can Invest

Congratulations if you have decided to start investing. The first thing you need to do before investing is – decide on the amount of money you can spare every month to invest for your future. If you are not the sole bread winner of the family and your husband is there to take that responsibility, I would suggest you try to save atleast 40-50% of your monthly income. This would ensure that in 5 years time, you will be sitting on a comfortable cushion of Investments that amount to nearly 3 times your yearly salary.

Another thing is – Whenever you get any bonus or extra cash-flow like inheritance of property/funds, don't be an impulsive spender and spend it lavishly. Make sure that you continue to save the planned 40-50% of your income, irrespective of how it comes. In such cases, even parking it as liquid cash in your bank account is better than spending it on some luxury item.

A Sample Saving Portfolio for a Working Woman:

Before we get into the details, the following are the assumptions I am making before outlining the portfolio:

1. Our woman is just an average working woman of India
2. She is not responsible for running the family but her income supplements the income earned by her husband
3. She is a responsible mother or a prospective mother who wishes to provide good education and a great future for her kids
4. She wishes to support the retirement corpus that her husband is building to ensure a smooth and peaceful retirement for the couple

Now that we know the assumptions, let us see how the portfolio is going to look:

Investment Vehicle	% of Savings To be Invested
Life Insurance Policy - 1	10%
Life Insurance Policy - 2	10%
Health Insurance	10%
Emergency Corpus - in a Savings Bank Account	15%
Cash in a Bank Fixed Deposit	25%
Mutual Funds	20%
Gold	10%

Rationale & Justification Reg. this Portfolio:

Well, if you see this portfolio, I have included many things. Let us look at the Rationale as to why I did that:

1. Life Insurance

Why? – Life Insurance is Mandatory. Every individual who is earning an income has to be insured to atleast 5 or in best cases 10 times their annual income. You are no exception. You need the life insurance.
Why 2 policies? - You might be thinking, why did I split up life insurance into two policies? The reason is – in case of some unexpected situation, you are unable to pay the premium for both policies, you can close one of them and continue to pay the premium on the other so that you will be insured but at the same time, you wouldn't be burdened by too much insurance premium.

2. Emergency Corpus - Liquid Cash in Bank Savings Account

Do I have to say Why?

3. Health Insurance

Why? – Because, you never know when you will fall sick or need medical treatment. It is always a good idea to have a health insurance policy. Make sure that you include your spouse and children as additional members of the policy to ensure that they are covered too.
If your husband is planning on taking health insurance, include your contribution and take a one good health insurance policy. It is always good to invest on oneself first.

4. Cash in Bank Fixed Deposit

Why? – Cash is King. This is the best 3 words I have learnt in my life. And they will be the best 3 words for you as well. Fixed deposits give you a decent rate of returns (usually around 8%) and would help you build up a good corpus by means of interest rate compounding

5. Mutual Funds

Why? – Mutual Funds are a boon to the normal investor who cannot invest directly in the stock market but still wishes to take advantage of the good returns that the stock market can give us. A 20% investment in MFs will help you generate good returns on your investments at the same time, help minimize losses, just in case the markets underperform.

6. Gold

Why? – It serves two purposes. Gold gives you diversification in your portfolio because gold is one of the best performing asset classes as of today. Also, you can save up a lot of gold for your daughters wedding and do it in a grand fashion.

Some Last Words:

The most important or rather most difficult task when it comes to maintaining the portfolio is – continuing to invest every month. You might be tempted to use the money planned for investment to spend on something else. Smart people will resist the urge to spend and save the money instead.

And, remember to take out some money every year to pay off your Insurance Premiums. Dont let them lapse.

Happy Saving Money Ladies!!!

Women – Start Investing Now!!!

Every home in India revolves around the Lady of the house. Be it the Mother or the Wife, either of these two women run our houses and to a major extent influence our lives. Women of India are multi-faceted and extremely talented. They are good at running houses, raising children, handling stress, as managers, as software engineers and what not. All that being said, the women of India are not so good at Investing.

Am sorry to have said that, but the grave truth is the fact that, Women in India do not bother much about investments or savings. They leave it to their husband or son or father, the man in their life to worry about those aspects. Though this is a nice approach, I personally feel that the women of today must come out of their shells and start investing and saving money for their future. The purpose of this article is to help them do just that.

Before I begin, if you are reading this article, do share this with your lady friends/colleagues/cousins because they too need to understand a few things about Investments and start saving money for their future.

So, let’s get started!!!

How are Women Different from Men?

Apart from the obvious physical differences between Men & Women, there are a lot of major differences between the two sexes. Some are:

 Most men earn money uninterruptedly throughout their lives (until retirement of course) whereas Women are forced to take breaks here and there
 Men are considered the chief income earners of the family and women don't bother much about the quantum of money they earn or save because the man of the house is there to worry about it
 Women have so many other responsibilities like running the house, taking care of the kids, taking care of their parents/in-laws etc that they tend to oversee or ignore the investment or saving money aspect of life
 Family and Children have a far higher priority in a woman’s life than it does for men.
 The list is endless and if I start listing it out, one blog wouldn't be sufficient. So let me stop with these differences alone and add an etc to the list to wrap it up.
 Etc…

Do Women need to Invest?

Most Men might think like this: When I am there to earn money and Invest it for my family’s future, why should my wife bother too much about it?

Many women might think like this: Investment is a mans job. He needs to worry about it. I have more pressing duties like raising my children or taking care of the home.

If you are one among the thousands who think like what I mentioned above, you need to revisit your thinking. Women Do need to Invest and save for their future. Investment is not a Mans Job and Women too can and must invest.

Why should women Invest?

The life of a Woman in India is a lot different when compared to the western countries. A majority of the ladies in our country are house-wives or home makers and do not have any steady source of income. Even the ones that earn face many challenges. Some are:

 Having to take a break from work for a year or so for child-birth and maternity
 Having to take a break from work to join the husband who might be employed overseas
 Having to relocate to a different city to join the husband who is employed in that city or got transferred to a different city – thereby sacrificing their current job and career

Most working women face a daunting prospect of having to sacrifice their careers and income in order to maintain a balance in their married/personal lives.

Every family today wants to provide the best possible education for their children, the best possible life-style for themselves and their parents/children and an extra bit of income from the wife is an added advantage. And if the woman is forced to compromise on her career or income because of any of the above mentioned reasons, her investments or savings can help her supplement her families income.

Apart from this, the average life expectancy of women in India is significantly higher than that of Men. So, she must have a solid corpus to support her in the unfortunate event of her husband not being alive to support her financially later in her life. Statistics show that, on an average, women live five years longer than men, earn 25% less during their life time and work 11 years less in their careers.

So, the point is – Women should Invest and do it regularly.

A Real-Time Example:

Lets say, lady X is currently employed and is earning Rs. 50,000/- per month but she has taken maternity leave and is planning to stay home for one year. Subsequently her husband gets an abroad opportunity and she accompanies him in order to stay with him and her family, she extends her break by lets say 4 more years. So in all, she has taken a 5 year break.

If we assume that she would have earned the same Rs. 6 lakhs every year, the family would have lost 24 lakhs of money that she could have earned (I have just considered the time she spent jobless while abroad with her husband. The time spent on maternity cant be equated with money as it is priceless…) assuming she would have got an average of 10% increment every year – the total amount the family lost sums up to nearly 28 lakhs. That is a lot of money. This 28 lakhs could have been used to:

 Fund her sons education abroad or
 Pay the initial payment on the family’s new home
 Be a corpus that can be used for her daughters wedding
 Pay for a new Car for the family and so on…

Apart from this, when she comes back to India at the end of 5 years of break, she might not get the same kind of job with the same kind of income.

Now, imagine how good it would have been, if she had invested at least 15-20% of her income for the 3 or 4 years of her career before she took this long break, the money would have grown and she would have had at least 8 to 10 lakhs of money that she can utilize for her family. Though this is not as much as the 28 lakhs, 10 lakhs is still a lot of money.

Now, do you realize how important it is for Women to Invest and Save Money?

If this article has instigated your urge to start investing or suggest your wife/daughter/friend to do the same, I would consider the purpose of writing this article served.

And – if you have been a regular reader of my blog, you are sure to know that I am not someone who will leave a topic half finished. As a continuation to this chapter, I will be writing the next chapter about how women can invest and what instruments she can choose and how to structure her investment portfolio.

Happy Investing Ladies!!!