- Date : 25/03/2020
- Read: 4 mins
Here’s a quick guide to help you plan your investments and safeguard your present and future.
Millions of Indian women struggle on a daily basis to earn a living, put food on the table for their loved ones, and take a step closer towards financial independence. Lack of gender parity, inadequate family support, and less-than-flexible work arrangements, along with lack of institutional childcare options, force many women to opt for part-time or freelance work options in the informal sector.
Even though such job opportunities do bring in much-needed financial succour, their unpredictable nature mandates women to focus on immediate obligations – with nothing left to invest and plan for financial goals. This can be a vicious cycle. If you too can relate to this, here’s a quick guide to help turn the financial tide in your favour.
1. Draw up a roadmap
The first step is to chart various financial milestones you want to achieve. You may want to buy a nice piece of jewellery before your next birthday, a new car a year or two later, or make a down payment on your own house. Having a defined goal makes saving and investing a lot more exciting.
Classify your goals as near-term, medium-term, and long-term, and prioritise them based on importance. Pick and choose investment avenues that will work best for a particular goal.
For example, if you want to buy gold jewellery, consider making periodic investments in a gold Exchange Traded Fund (ETF). This way, you can buy gold in very small, affordable instalments and take delivery when you wish to get your jewellery made, without having to worry about rate fluctuations.
2. Secure your health
If you don’t already have a health insurance plan in place, getting one should be top priority. Your present and future earning potential depends on your good health. Not having health insurance for yourself and your dependants could wipe out all your savings and make you end up in a debt spiral. To safeguard yourself against unknown health risks and financial liability, a health insurance is an absolute must.
3. Take the cookie jar approach
Just as little drops make an ocean, every rupee you put aside will take you that much closer to your financial goals. Saving money and investing are interconnected. You need to save before you can invest. Waiting for a big chunk of funds to come before you start investing is an exercise in futility – what’s more, you miss the opportunity to hop on the investment bus.
So, budget for your needs and cut down on non-essential expenditure. Bringing in investment predictability will make you less stressed about money. Similarly, in a scenario where you find yourself with an excess of funds, stay disciplined with your expenditures. Every time you have cash in hand, think of investing it as a way of paying your future self.
4. Try to play it safe
Interest-bearing investments are the way to go. As enticing as they may sound, you do not want to risk capital erosion by going after market-linked investments. For short- to medium-term goals, invest in a bank deposit. The interest is reasonably attractive and the investment is extremely liquid, so you can withdraw money when you need it.
Don’t have enough to make a fixed deposit? Deploy your funds in a liquid fund for the interim period. The investment is safe and offers much better returns than letting the funds idle in your bank account.
Similarly, if you are looking to save up for retirement, earmark a monthly sum towards a Public Provident Fund (PPF). PPF comes with a sovereign guarantee and allows you to benefit from the power of compounding. Over a 10–15 year period, your small savings can snowball into a substantial retirement kitty.
National Savings Certificate (NSC) and Kisan Vikas Patra (KVP) are other attractive options to meet long-term goals such as saving up for the down payment on a house or paying for your child’s education. Other than being absolutely secure with guaranteed returns, PPF, NSC, and KVP also offer tax benefits under Section 80C of the Income Tax Act.
There are a host of investment avenues available to women investors, but it is important to choose options that fit your goals and your pocket. Aim to strike a good balance between saving up for long-term goals, your retirement, and building a cash reserve for emergencies. Keep an eye out for government-sponsored special investment schemes for women.
Most importantly, start today. As your actions become a habit, things will get easier and your future self will love you for your far-sightedness. Check these 5 Financial habits everyone should follow.