TomorrowMakers

These investment avenues can ensure that your sunset years are comfortable and happy.

Investment options for women entrepreneurs and freelancers that will secure their retirement

Being a woman who is an entrepreneur or freelancer gives you immense freedom and flexibility. You can chart your own career path, take up assignments that excite you, and decide the hours you want to work. However, taking the solo route also means accepting the fact that you may not have a steady income or company-sponsored perks such as a structured pension plan or group health benefits.

It can be a challenge to juggle business and personal finances, but with a disciplined approach and the right mix of asset classes there’s no reason why you cannot have a comfortable retirement. Here are a few investment avenues that you should consider for different use-cases. See how women entrepreneurs can look at COVID-19 crisis as an opportunity.

Post-retirement income

Generating income should be your first priority when you start on a retirement investment plan. Women spend a longer time in retirement on account of their higher life expectancy. These investment options can help generate periodical income to help offset living expenses.

  • Monthly income plan (MIP): This is a category of mutual funds that can be a great income-generating tool, especially for women who start saving for retirement early. It’s a hybrid investment plan that has a higher allocation to debt than equity. The equity exposure helps to deliver better returns over the long term as compared to traditional investments such as fixed deposits. Profits from the investment are paid out to investors as dividends. And unlike a lot of other post-retirement schemes, MIPs don’t have a lock-in period, which means you have the freedom to withdraw your investment if you need a big amount in an emergency.
     
  • Annuities: If you have lump sum savings, consider investing in an annuity plan. This is a type of insurance plan that offers a guaranteed income for the policy term, which can go as high as 90 years. Some insurance providers also offer a guaranteed annuity for life. Based on your purchase price, the annuity or income is fixed at the time of investment. After retirement, you have the option of receiving the proceeds in monthly, quarterly, or yearly instalments. You can also purchase an annuity with return of purchase price, in which case your nominee can receive the initial investment as a corpus after your demise.

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Wealth maximisation

A lot of people look to relocate after they retire. You may wish to buy a new property, make repairs to an ancestral home, or upgrade your furniture and white goods. You may also want to save for your child’s education or marriage. Here are some investments that can help you achieve these capital intensive milestones.

  • Equity SIPs: There are very few asset classes comparable to equity that allow you to really multiply your savings. Taking the systematic route is an affordable way to build a substantial kitty for your post-retirement life. Equity exposure through SIPs helps and evens out volatility while compounding wealth over the long term. There are thousands of funds ranging from blue chip funds to sectoral funds to emerging market funds to tax-deductible equity-linked savings scheme that you can pick from to curate a custom portfolio.
     
  • Small savings schemes: While equity provides growth, small savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), and Senior Citizens Savings Scheme (SCSS) can provide stability and mitigate risk in your retirement portfolio. These government-sponsored schemes carry virtually no risk, offer a fixed return (evaluated once every quarter), and are tax-deductible under Section 80C of the IT Act. As you inch closer to retirement age, your asset allocation needs to shift towards such secure investment options. 

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Security

Some financial decisions are not made to generate returns but to provide security and peace of mind. Health insurance for self-employed people is a critical pillar of financial planning. It ensures that you don’t have to dip into your retirement savings in the event of a medical emergency. Similarly, a life insurance plan secures your family’s financial future and safeguards their shared goals even in your absence.

As a self-employed woman, retirement planning should be a priority, irrespective of your age, marital status, or income. The key is to set the plan in motion at the earliest and stay disciplined so that your golden years are a period of ease and contentment. How the pandemic challenged women entrepreneurs