Armed with confidence and better know-how, the financially independent woman of today is challenging the traditional norms of how to save and invest.

Investing habits of Indian women: The good and the bad

Asset management companies, insurance providers, investment firms, and advisories have developed a renewed interest in women as a demographic for financial products. The financially independent woman of today, armed with confidence and better know-how, is challenging traditional perspectives of how they save and invest. 

A study on investment behaviour of working women included the qualitative aspects of investing habits across age groups. Here are some of the findings.

Younger women are fast-tracking wealth creation with equity assets

Women in the age group of 18-30 are more likely to invest in a high-risk, high-return asset class such as stocks or mutual funds. The increased level of awareness and breadth of information available today allows women to embark on their wealth creation journey at an early age. Over a longer horizon, equity assets have proven to be among the best investment options in India.

While 60% of women invest in direct equity, over 80% prefer investing via mutual funds. The assurance of professional management, a wide array of investment choices, low entry and exit barriers, and SIPs makes mutual funds one of the most sought after investment options.

Related: What Investment Options Do Indian Women Prefer Today?

Gold continues to shine

Our love affair with gold is as old as time. Women across age groups and socioeconomic categories continue to invest in the precious metal. Gold investment in India not only has traditional reverence but also acts as a safe haven and hedge against economic and currency fluctuations. Gold continues to be a primary asset in rural India, whereas it acts as a portfolio diversifier for urban investors.

It is estimated that 25% of all women invest in gold, with the percentage scaling up to 40% for women in the higher income brackets.

Traditional assets are a safe bet

Bank deposits, post office schemes, recurring deposits, etc., are secure investment choices that have stood the test of time. They offer capital protection and high liquidity. Owing to these features, a lot of women continue to invest a significant surplus in fixed income assets even though the returns may not be the most attractive.

Close to 60% of women invest in traditional assets, but in many cases, this could be due to limited investment choices or a lack of confidence.

Where else can women invest?

The range of financial products has increased by leaps and bounds over the last decade. In fact, we have new asset classes and investment opportunities that were unfathomable even a few years ago. However, instead of adding eclectic assets, many women need to get their basics right.

Related: 9 Best Monthly Investment Plans For Indian Women

  • Tax-saving investments

Surprisingly, tax planning is not high on the agenda for most female investors. Only about 11% of the women surveyed are actively looking to save tax. Even though investing for the sake of tax benefits is not the right approach, there are a host of options across assets from PPF, deposits, bonds, mutual funds, ULIPs and more, that can provide the dual benefit of capital appreciation and tax optimisation.

Under Section 80C itself, women can reduce their taxable income by Rs 1.5 lakh each year. Additionally, all tax-saving instruments come with a pre-specified lock-in period that can be a great way to build discipline and provide enough time for your capital to grow.

  • Retirement planning

Saving for retirement ranks as the second most important goal for women in the 25-35 age group. However, only 9% of women are actively investing in pension-oriented schemes. Women tend to have shorter careers and longer lifespans than men, so they need to ensure that their savings will last them through their entire life. Women’s retirement goals will require them to make a higher allocation from their savings.

In addition to investing for a sizeable corpus, women also need to make strategic allocations towards income-generating options such as pension funds or endowment plans, money-back plans, and mutual funds with systematic withdrawal options that can help take care of all living expenses.

Related: Best Ways To Improve Financial Security For Women

Last words

Every woman has unique personal needs, so their financial journey and investment approach will also be different. Consult a financial professional who can offer unbiased advice and help you get on the right track. More importantly, time is your biggest ally, so make the most of your opportunity today.