‘Children and family ought to be my priority, not my personal investments.’…‘Women are not good with numbers’... ‘Investments and taxes are too complicated for women to understand’…
You would have heard people, including some women themselves, parrot these lines over the years. This, despite women following their financial plans diligently and being meticulous with their personal and household budgets.
It’s now time to bury some long-held myths. Look beyond these misconceptions to ensure complete financial freedom.
Children’s education is more important than retirement
Family and children figure right on top of women’s priority list. So much so that they neglect their own goals and requirements. However, you need to remember that you can take an education loan to fund your kids’ studies, but not for your retirement. So, start early, stay invested over the long-term and do not direct investments meant for your retirement towards other goals. Even if you do not earn a salary, invest your regular savings – even if the amounts are small – to create a corpus for your retirement.
Women cannot handle risky investments
Equities are known to yield the highest returns amongst all asset classes over the long-term. However, financial planners say women’s risk aversion makes them rely more on fixed income instruments. “By default, women tend to be more risk averse. Uncertainties due to career breaks is one of the factors responsible for this,” says financial planner Dilshad Billimoria, Founder, Dilzer Consultants. The key is to stay unruffled in the face of market meltdowns – like the current one – until you reach your goals.
However, even if you are wary of equities, you can look ‘safe’ instruments but ensure that you stay invested over the long-term. “Money needs to be invested for long term to grow, and risk mitigates itself over long tenures. But even options like PPF and EPF build wealth if we invest regularly, let it stay and compound and invest more as we earn more,” says Shweta Jain, Founder, Investography.
Gold is the best, time-tested savings avenue
For many women, gold purchased and inherited constitute key assets in their portfolio. However, do not put all your golden eggs in one basket. Diversifying your portfolio across asset classes – add equities and fixed income to your asset allocation mix. If you must invest in gold, look at options such as gold ETFs and sovereign gold bonds. This will achieve twin objectives of insulating your portfolio against inflation and ensuring liquidity. And many women have now indeed started considering these options. “Newer investments are happening in sovereign gold bonds too. When we see no exposure to gold in the portfolio, we recommend gold ETFs and these bonds,” says Billimoria.
Post-marriage, all assets and investments are meant to be joint ones
Financial compatibility, along with other factors, is indeed key to marriage. You need to be in sync when it comes to taking important financial decisions such as buying a house, planning for children’s education, your retirement and so on. However, as we have pointed out earlier, you should not completely ignore your personal wealth creation goals either. You can contribute to investments meant for joint goals, but also create a separate kitty for your personal goals. “You can contribute to your family’s investments, but also ensure that you invest separately for yourself too. You can invest to build a kitty for your retirement, vacations or other needs. Separate, independent corpus is desirable for women who do not draw an income too,” says Billimoria.
Women are not good with financial decisionsMany women tend to leave financial decision-making to their husbands. However, being a working woman is not enough, you must be closely involved in your family’s crucial investment decisions. Only when you are clued into your family’s investments and in complete charge of your own investments can you experience financial independence in its truest sense. “Women tend to want to be 100 percent confident when they take up a responsibility and hence they shy away from investing as it is always in learning mode. Women, when encouraged, can be amazing investors, focused on goals, trust in the funds/managers/advisors and tend to stick by their decisions in bad times rather than jump boats,” says Jain.