Deepa Murali works in the HR department in a multinational company and takes home a decent salary. She and her husband jointly own their house and she pays half of the equated monthly instalments towards their joint home loan. She also has investments in bank fixed deposits, public provident funds. She also has a few insurance policies. However, all of this was done on the advice of her husband, who works for a bank.
Recently, her company organised a workshop on financial planning solely for women. There Murali and her other female colleagues came to know about the various kinds of mutual funds, gold ETFs, and other products like NCDs, tax-free bonds, National Pension Scheme and several others. Now she is planning to consult a financial planner to streamline her investments.
Many women are in the same situation like Murali. Though women are actively participating in the workforce in a major way and are earning good incomes, they do not take much interest in managing their money.
Women also find that there are interruptions or discontinuities due to marriage, child birth, transfer of spouse, ailing elders in the family who need constant care and so on. This leads to women leaving the workforce from time to time. They look for flexible work or part-time work and compromise on their earnings if these criteria are met. Hence, their earnings don't match their potential. In such cases it is even more important to know how to invest your money safely and earn good returns
When it comes to investing, there is not much difference in the number of single or married working women who depend on others to take decisions. A study conducted last year showed that only 18 per cent of single working women take their own decisions and in case of married women it was only 13 per cent. In fact, the study showed that only one in every four working women, take their own financial decisions about where and how to invest.
We look at how they can take steps to change this attitude:
Understand money matters
Women have been conditioned to believe that their primary role is to maintain a good home and raise children. The tendency is to believe that managing finances is the prerogative of the male, hence, most women tend to switch off, when it comes to managing money.
Due to this, their finances are managed by their father, husband, friend, brother etc., which further puts some distance between them and their money. Since they do not want to know about finances and products in which to invest, they would have to trust the person taking care of their finances, implicitly. That can create problems lots of times.
Many times, women sign papers which they have not read, based on trust. Trust is fine, but such blind faith can sometimes lead to malpractices, using the money or siphoning of money. That is why there are cases of women whose family members cheat them of the insurance money they get following the death of their husbands or sons. Remember that is someone else is managing your money, it will instead be managed based on that person's thinking. And if that other person is not an expert on finances, it will make things worse for you.
Look beyond traditional products
Women who invest themselves, tend to make a beeline for the traditional investments options like fixed deposits, recurring deposits, post office investments, gold, property, etc. Due to lack of knowledge and risk awareness they tend to ignore the asset classes like mutual funds and other equity related products. This means that their corpus may not be able to beat inflation and they may be underfunded in their retirement. Therefore, they must not shy away from risk-taking at least in the initial period of their careers.
Don't fall for women-specific products
Many banks and insurance companies offer products specifically for women. But before you invest in such products compare them with the regular products from the companies. Only if the returns and features are better should you consider them.
For instance, while buying health insurance, check if the plan offers coverage for women-specific ailments like breast/ ovaries/uterus cancer and child-birth-related problems.
Some housing finance companies offer loans at lower rates for women borrowers. This could be a good idea to cut the overall cost of your home loan. But must remember that the loan will be in your name and in case of any defaults, you will be responsible.
Learn about increasing returns
Women investors should get over the aversion to money. For this, read newspapers, magazines or websites. You must understand the product before investing and evaluate if fits your profile. Once you decide where to invest, do so regularly. Keep a full compilation of all investments and look at it at least once a year. Deploy the surplus amounts in investments, rather than letting it lie around for months on end in the savings accounts. Involve a good financial advisor rather than just relying on your family members for advice
Try and increase your returns by learning about different asset classes and adding them slowly. Over time, with regular updates and maybe a few mistakes, you will get better with your money.
The author is Founder, Ladder7 Financial Advisories
GET WISER ABOUT YOUR MONEY
n Don't be risk-averse or avoid equities, mutual funds or other equity-related instruments
n Don't go overboard with traditional investments which may not beat inflation
n Actively participate in managing your finances
n Take help from a financial advisor on your goals