- Date : 09/12/2020
- Read: 6 mins
Countering excuses and misconceptions that women may have about investing in stock markets.
ndia sees a drastic transformation in women’s upliftment. Over the decades, lack of education and opportunities had prevented them from participating equally in the workforce, which hindered their financial independence. According to the 2011 census, the female literacy rate in India is only 60%, whereas the male literacy rate is 80%.
Traditionally, women took care of households, and men were the breadwinners. This empowered men to take all decisions. However, things are changing. Women have progressed in the corporate segment, the world of sports, art, etc. However, stock market investment is an area that is still dominated by men. As per research by Central Depository Services Limited (CDSL), 75% of stock market investors are male, while female investors comprise just 25%.
However, this doesn’t mean that Indian women aren’t aware of the potential of the Indian stock market. According to a survey conducted by a leading investment platform, 82% of Indian women believed that stocks and mutual funds could help them achieve their financial goals.
The change wrought by 2020
This pandemic year, however, has seen a huge jump in female investors - by 53% between April and June - as compared to the preceding three months. It is widely believed that ‘working from home’ could have been a key factor that enabled women to participate directly in equities. This, in turn, tremendously helped them understand how to make money in stocks.
The rise in the number of women investors can be attributed to the need to earn more. Women who have been investing in the stock markets have taken the effort to educate themselves. They are less likely to be intimidated by it and more likely to take calculated risks. They realise it comes with numerous benefits. Some women are stock traders who buy and sell stocks daily, others are active investors who look at profits, and yet others are passive investors.
So why are women averse to the idea of playing the stock market? Well, they could have various misconceptions about investing in the stock market. That aside, women end up justifying their low participation in the equity markets with certain excuses as well. Let's look at some of the most prominent ones:
Related: 25 Stock Market Terms For Beginners
1. I don't have enough time for investing
With mounting daily chores, women often do not have the time to take care of themselves. But it is all about planning. They can switch to app-based investing, which can be done when they are commuting. They can also set up an ECS facility for regular investment. This way, they can ensure that their savings, big or small, are always invested.
2. The stock market is volatile; how will I know if my money is safe?
Fear of losing money often keeps women away from stocks. Stock markets have always been volatile. But compared to other investment options, they are ideal if one wants to beat inflation and potentially earn good returns. The Sensex has delivered[S5] a CAGR of more than 15% since its inception. But those who want to invest in the stock markets should do their research first. They need to stay invested for the required period and not succumb to panic selling in case of volatility. They must understand that staying invested is how one can make money in the stock market.
Related: How To Invest In Stocks Like A Pro
3. I am too old to benefit from investing
One often feels that age is against them as far as investing in stock is concerned. The thing is to identify those funds in their portfolio that can be in high-risk investments and for the long term. As long as one can find such a segment and create investment goals and strategies, age does not matter in the least.
4. I don’t have any savings left after my monthly expenses
This is one of the most common excuses for not investing. Lifestyle expenses may end up eating into most of your income, and you may not have funds at the end of the month to invest.
Pro tip: A useful approach to adopt is Earnings minus Investments = Expenses rather than Earnings minus Expenses = Investments. All one needs is a tweak in mindset. Ordering food twice a week? How about cutting it down to once a week instead? Love to splurge on new shoes every couple of months? You can easily go without new shoes for much longer than that.
5. One needs a lot of money to invest in the stock markets
It is a popular misconception that substantial funds are necessary before one can begin investing. If you think likewise, you are likely to end up procrastinating.
Pro tip: You could take small steps towards saving up for investing. You can begin investing in mutual funds with as little as Rs 500 a month or purchase a few shares of fundamentally strong stocks for the same amount. Focus on the ‘Eighth Wonder of the World’ (which is how Albert Einstein is reputed to have referred to the power of compounding). This means that, over a period of time, even tiny investments can end up growing exponentially into a substantial corpus.
For example, most mutual funds have offered a CAGR of more than 12% over the long term. Guess how much you will be able to save if you invest Rs 3000 every month for 30 years at 12% CAGR? An astounding Rs 1.1 crore!
6. Only those with ‘connections’ can make money in the Indian stock market
The Indian equity markets are among the most well-regulated ones in the world. There have been several instances of individuals without any connections or influence creating wealth after conducting due diligence and adequate research.
Pro tip: Ensure that you invest in fundamentally strong stocks after doing adequate research. It is best to avoid taking investment decisions solely on the basis of tips.
We hope we have been able to counter some of the main misconceptions and excuses about investing in stocks, and look forward to seeing Indian women participate in the stock markets in larger numbers.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.