A few years ago a popular e-commerce website ran an ad featuring a few couples who were given a certain amount of money in a gift card. They were then individually asked to buy items using the gift card from the e-commerce website. Turns out that women spent most or all their money on meeting their families’ needs while only a few men did so. There was nothing wrong with either what the men or the women did as both sets were happy with their purchases. But the ad was an attempt to make women realise how women often don’t take financial decisions keeping themselves in mind.
Let’s take this further and apply it to investment decisions, and the participation of women falls even more. Women are not accustomed to thinking about investments the way men are. They are simply not trained to do so from a young age. However, today the role and status of women in society is changing and with that their financial needs are changing as well. Gone are the days when women were mere home managers and didn’t have any dreams to chase. Today, women are choosing to be single parents, or simply staying single, homemakers or working mothers and wives. They are chasing their dreams, setting up businesses, becoming entrepreneurs, and living life on their terms.
But to achieve these dreams many women still don’t have a viable financial plan in place. They leave financial planning to the male members of the house. And those who do take charge of their money matters are often influenced by familiarity bias. This means they are comfortable with traditional saving instruments and don’t want to consider other more efficient ways of securing their future.
Their financial needs -from starting a business, to being emergency ready to saving for your children’s future, clearing off debts orbuying a bigger house – need to be planned for carefully. But will only saving money at home or keeping it in a bank help you fulfil your responsibilities and goals? Maybe not! And the biggest reason for this is inflation. The rise in the price of goods and services eats into your savings and reduces its purchasing power. To be able to counter this, you must invest your money in avenues that will help you earn inflation-beating returns. And this is where mutual funds may be of help.
There are different types of mutual funds to suit different needs. For example, equity mutual funds are known for delivering high returns in the long run. The liquidity of overnight or liquid funds makes them an ideal choice for building an emergency fund. Solution-oriented funds like children’s benefit fund and retirement fund may aid in funding your child’s education and saving for your retirement, respectively.
Do you want to make goal-based investments? Here are a few tips to keep in mind while investing in mutual funds.
- Start investing early: When you begin investing early and stay invested for the long term, you allow the power of compounding to work on your money and, in turn, allow it to grow.
- Start small, step up later: You can enter the investment world with an amount as low as Rs 500, thanks to Systematic Investment Plans (SIPs). A step-up SIP also allows you to top up your SIP contributions after specified intervals.
- Don’t follow the herd: Select a mutual fund scheme that suits your financial state, risk appetite and goals.
- Create a diversified portfolio: Invest across asset classes, market capitalisations, sectors, themes, countries, etc.to minimise investment risks.
- Don’t ignore taxation: Taxes reduce your take-home profits so know the tax implications of the fund that you choose.
- Don’t ignore retirement: Make the most of mutual funds to save for your retirement too. You can opt for hybrid funds to build your corpus systematically.
- Review your portfolio: Check the performance of your portfolio periodically to ensure that your investments are in line with your goals.
To Note: You can always reach out to a financial expert or financial advisor for help with investment decisions. The above-mentioned tips should be viewed as investment guidelines or even as good investment habits. Financial planning requires constant engagement with your investments and monitoring so you know if these investments are on track and will help you meet the financial goal you are saving for.
Hey, this is Johny Sehgal. I am the owner and caretaker at Finance Jungle. I completed my education in BSC and now heading towards the digital marketing industry. I usually have interests in reading, playing games and watching movies. I also love to write content based on quality information. The main motive of mine is to provide the top and best quality information to my readers. Finance Jungle is the blog for the same.