TomorrowMakers

A look at some of the investment options a woman can opt for while creating a source of regular income for herself.

What investment options can create a regular income for women?

Indian women lag behind men when it comes to investing and taking investment decisions. A recent survey in eight major Indian cities revealed that only one out of three women take investment decisions independently. Out of the women who actually do invest, just 42% consulted a professional financial consultant. 

Regular income is an important factor that drives investment decisions. Here are a few investment options that are ideal for women looking to ensure a regular income for themselves.

Bank fixed deposit (FDs) are among the best investment options in view of safety. The interest rate varies from bank to bank, but averages around 7%. It may even exceed 9% on occasion. Both private and public sector banks offer FD schemes to their customers; these schemes offer different tenures and interest rates. With a non-cumulative fixed deposit, you can enjoy interest payouts on a monthly, quarterly, half-yearly, or yearly basis. Housewives and professional women invest in FDs for the guarantee of assured and high returns.

Related: 4 Ways to create additional sources of income

Corporate deposits are similar to bank FDs but can bring in even higher returns. These are offered by non-banking financial companies (NBFCs) and housing finance companies. While most of these products yield a quarterly or half-yearly return on investment, one may also opt to receive the returns on any given four months. While choosing these deposits, you must look at the credibility of the company and their credit rating. As mentioned earlier, these deposits offer return rates higher than that typically gained from fixed deposits, with a lucrative 10-11% per annum.

Long-term government bonds are another low-risk investment option through which you can receive interest income half-yearly or annually. Although these bonds can tie down your investment for a longer tenure, the fact that they can be traded in the secondary market makes them liquid in times of need. At present, the 10-year government bond has a yield of 6.44%.

Post office income scheme is one of the most popular and reliable investment options in India. Among women, it is equally popular among homemakers and small-time entrepreneurs. The risk element is next to none and it promises a regular and alternative source of income. Currently, the monthly income scheme offers an interest rate of 7.6%, payable on a monthly basis. You can invest up to Rs 4.5 lakh in your individual account and make deposits in multiples of Rs 1000. 

Related: How to stay solvent in a single-income household

Although Dividends on equity share has been made taxable at the receiver’s end in the latest budget, nevertheless equity shares present good returns for the investor. As an investor, it is advisable that you earmark a portion of your investment in shares. This is the part of your investment that will be exposed to market risks, but it can help you reap the benefits of growth. A well-analysed investment in shares can offer handsome returns. Dividends may be paid monthly, quarterly, half-yearly or annually, depending on the company’s decision. The return itself is entirely dependent on the performance of the company and the market sentiments on the shares. Of course, if it is not possible for you to regularly study the market and monitor your share portfolio, it is advisable that you invest in reliable companies on a long-term holding plan.

Annuity plans act as one of the best investment options for salaried persons. As a working woman, you should invest in an annuity plan as a regular income source, particularly for your post-retirement life. Most Indian insurance companies offer a steady income with minimal risk through their annuity plan products. In immediate annuity plans, you start receiving your return immediately after you make your lump sum investment. In deferred annuity plans, the returns start coming in after a particular duration, and you can align it with your retirement. Since these plans provide life cover benefits in addition to interest, the yield is generally low. LIC’s immediate annuity plan Jeevan Akshay, for instance, offers 3%.

Mutual funds are a very convenient investment option as it is customisable and can meet the risk and reward expectations of any person. If you are a working woman who doesn’t want to miss out on a booming economic growth, yet don’t have the time or expertise to trade in stocks, a market-driven mutual fund is ideal for you. Mutual funds can be equity-backed, debt-backed, or a mix of the two. If you are a housewife who wants a regular income without too much risk, look at a debt mutual fund.  With a systematic investment plan (SIP), you can earn monthly returns for the duration of the plan. The returns vary, but 10% per annum is generally seen to be the minimum. Similarly, a Systematic Withdrawal Plan (SWP) can be a regular income source. With SWP you can withdraw a specific amount from your mutual fund investment at a regular interval. 

Real estate is an expensive investment option but is made affordable by the easy availability of home finance. The cost of finance is cheaper for women, and the repayment terms are often very flexible. A property on its own wouldn’t yield any income other than long-term value appreciation, but by earning a handsome rental income you can indeed benefit from your real estate investment.

Related: Do you know about these cost-effective investment options?

Last words

These investment options offer different yield rates and have different levels of risk. While planning your investment profile, you should consider the risk and reward attached to each product. You should also ascertain if the investment meets your income expectations. Seeking advice from a financial expert will help you to make investments more astutely – and hopefully more often. If you have inconsistent income, here are some budgeting tips you should know about. 

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.

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