What all women (and others) need to know about investing for the future
âI really want to start investing my savings, but the thought of losing money in volatile markets really sets me back,â says Vandana Singh, who works as a senior software engineer at a multinational company. âThe fact that financial decisions are made by the ‘men’ of the house has inherently made women believe that this is not their cup of tea,â says Veera Jain, research associate at a prestigious educational institution.
Have you ever wondered why, although it is one of the most important aspects of a fulfilling and secure life, financial education has not been included in our school curriculum, or even in our business configuration?
While we need to be aware of ‘types of monetary instruments’, the actual practice of investing is still a daunting task for many. Women, in particular, were given enough confidence to work and earn enough, but not enough to put their earnings in the right spheres.
Women who are capable enough to hold managerial positions in their workplaces mostly feel inferior when they talk about financial conditions – so much so – that now even women themselves have started to believe that managing finance and investing money in the markets are far beyond their comprehension. Lack of confidence, being dependent on others for financial counseling, fear of losing hard-earned money are some of the factors why finances and women are not seen to be sailing in the same boat.
In the meantime, it is crucial for us to know that one achieves not only financial independence by earning, but also by placing one’s earnings in the right places, to potentially save for important life events and maintain a retirement corpus. .
The main determinants
Your mode (s) of investment may depend on one or more of the following factors:
- Income – You can decide what percentage of income you prefer to spend, save in cash and invest in short or long term securities.
- Age – If you can / would like to start investing at a young age, you are usually able to take more risk and can invest in stocks or equity mutual funds. If you are in your 30s or 40s, you may prefer to invest a large portion of your savings in less risky and highly liquid assets.
- Technical know-how – If you are reading this on your cell phones, you can optionally use the same device to download an app like Groww, Zerodha, ET Money among others and start investing with just a few clicks. Yes, you read that right! And if you’re having other difficulties managing your Demat account, well, help is just a click away.
- Appetite for risk – If your income and spending habits allow you to set aside some of your earnings in higher risk securities, you may also be able to benefit from larger earnings. On the flip side, if you’d rather stay risk averse, gold and mutual funds are the easiest and safest ways to start.
- Willingness to learn / invest – The most important step in starting something is to have the will to become involved in its understanding. If you plan to have a more secure future and have contingency funds for emergencies, get started today!
Read more: With lower rates on term deposits, retirees are very worried
The different options for investing your money
Now let’s see how we can “start” to invest and make your money work for him, instead of just working for his money!
Stocks are securities that give shareholders a share of ownership in a company; we can then directly benefit from the capital appreciation of a company’s shares. However, at present when the Indian stock market is recovering and attracting potential investors, investing in stocks may not be so straightforward given its volatile nature and low assurance of multiple returns. With proper research and diversification across sectors and market capitalizations, one can certainly go public.
How? ‘Or’ What decide if “stocks” are the answer to your investment choices?
- Always consider their risk appetite before investing in stocks. You can determine your risk appetite based on the share of monthly / regular expenses incurred from income, any immediate key life event such as a marriage in your family or the intention to move to another. city ââ/ another country.
- One should only invest in stocks after determining their immediate cash flow needs. If you are someone who can easily invest money and keep it aside for a longer period of at least more than 2 years, stocks may be your choice. However, if you have to meet quick needs at different times, investing in a more liquid asset (which can be easily cashed out) should be preferred.
- Mutual fund
Mutual funds are securities for investors looking for stable returns because they are a less volatile asset class. If you are someone who wants to start investing but is wary of the risks involved, debt mutual funds could be an effective place to start as they mostly invest in securities that earn fixed interest. Mutual funds can offer you annual returns ranging from 3% to 6% and five-year returns ranging from 7% to 10%.
However, even these mutual funds are not completely risk free and come with potential risks such as interest rate risk and credit risk. Therefore, one should always carefully research the associated drawbacks before investing.
Here is a list of Instagram pages / brands / newsletters that you can follow and subscribe to for regular updates on finance and related terms and events:
- fin strokes
- to grow
- The Ken
- Fixed deposits
Remember how our grandmothers advised us to open a bank account and put all our money in an âFDâ? Well a fixed bank deposit is still a preferred investment method for many as it is considered a relatively safer choice for investing in India.
An FD is an investment vehicle that banks and non-bank financial corporations offer their clients where people can invest a certain amount of money for a specified period of time at a predetermined interest rate. The interest rate varies from one financial institution to another. Term deposits are available for different time periods, ranging from very short terms of 7-14 days to long terms of 10 years.
The mathematical formula for calculating the interest returns on a FD is:
Interest on FD = Amount invested x Interest rate x (Duration / 12 months)
where interest rates could vary between 2.5% and 5.5% for ordinary citizens and between 2.9% and 6.5% for seniors.
You can choose to reinvest the interest or receive an amount of interest periodically in your bank account by investing in Accumulation Where Not combinable FD.
- Cumulative DF pays you interest and principal at maturity. Interest is reinvested each year. The cumulative FD option may be right for you if you don’t need a steady stream of income from the investment in question.
- Non-cumulative FDs will pay you interest at fixed intervals. You can choose to receive monthly, quarterly, semi-annual or annual interest payments, depending on your needs. This will give you a steady stream of income.
However, if you are looking for adequate or aggressive returns on your investments, the FDs may not be able to meet the short term goal.
While term deposits carry little or no market risk, the returns of mutual funds are determined by market forces.
- Liquid assets like gold
If you are a professional, the first thing you might think of is putting your savings in gold which functions as a single asset that is very liquid and carries no counterparty risk.
For people looking to invest in luxury assets, the Reserve Bank of India has announced the issuance of Gold Sovereign Bonds which are government securities denominated in grams of gold. SGBs are substitutes for holding physical gold and investors must pay the issue price in cash; the bonds will be redeemed in cash at maturity.
The bonds bear interest at a rate of 2.50% per annum on the amount of the initial investment. According to personal finance experts, RBI Gold Bonds are worth considering as an investment option because these bonds are backed by the government.
Read more: What the city’s educated young woman needs to wake up
Pro tip: Always keep an emergency corpus of 3 or 6 months of your monthly salary in cash, preferably cash or safe havens like gold. You should also try to keep all their financial data and passwords saved and shared with a key trusted candidate, in case something unforeseen happens.
How can we do our part to have a financially literate population?
Those with knowledge in the field of investing could organize awareness campaigns within their communities and conduct volunteer mentoring for marginalized and low-income groups of women. You can also follow the social media pages on Instagram and Twitter, or subscribe to newsletters to have a basic understanding of the concepts,
People can also be introduced to the various monetary instruments, simultaneously educating them about the potential risks associated with investment traps which claim to offer their clients incredible bonuses in a short period of time, but which usually collapse and the customer ends up losing money. .