In India, we can see a rising percentage of women taking interest in investments. Women are generally considered to be wise when it comes to savings and also outperform their male counterparts. Women are seen taking decisive steps to ensure that their financial future and that of their family’s is secured. For women who have not started their investment journey, Women’s Day is an ideal opportunity for women to achieve this goal.
A variety of options are available for women in India today to choose from and to diversify their portfolio of investments. For someone who is new to investments, they can opt for this rule.
It can be suggested allocating 50 per cent of the corpus in mind in equity which could be a mix of mutual funds and shares, 20 per cent can be in fixed income like fixed deposits and debt instruments, and the balance in gold and liquid instruments. As a thumb rule, women should invest 100 minus their age taken as a percentage in the markets for a substantial return.
Investing in the stock market and mutual funds: While investing in the stock market, one should follow the 5 percent rule which essentially says that investment in a particular stock should be limited to 5 percent of your total outlay in the equity markets. I am suggesting a higher outlay for the equity market because equities have offered returns of a share above 15 percent CAGR over a 15 to 20-year horizon.
The Union Budget this year has also opened opportunities to invest in specific sectors in the stock markets. These include the thrust areas of the government like infrastructure, electric vehicle stocks, green energy, manufacturing (thanks to the extension of the PLI scheme) and logistics. Investments can also be made in thematic mutual funds built around these sectors.
Mutual funds are becoming a common investment vehicle but one should go ahead with proper study and research. With multiple options available like liquid, debt, and equity schemes, the returns too vary and one should invest depending upon one’s goal and risk profile. SIPs are a good way of steadily investing and also helps in deriving tax saving benefits.
Gold: Gold is one of the most sought after options when it comes to women and has also stood the test of time. However, instead of saving in physical gold, the government has launched a new scheme of Sovereign Gold Bonds which helps store gold in electronic form and also gives a small interest.
Public Provident Funds: A common instrument is the Public Provident Fund (PPF). It’s a long term saving scheme having a tenure of 15 years and yields and offers a better interest rate than a fixed deposit. The present rate is 7.1%. Annual investment can start range between Rs 500 to Rs 1.5 lakh.
Kisan Vikas Patra: It is a popular investment plan offered by post offices in India and can be considered for some long term goals. The systematic investment plan (SIP) is valid for 9 years and 5 months and the current interest rate is 6.9 percent annually. This scheme multiplies protects the capital. It has no maximum limit of contribution but needs a minimum investment of Rs 1,000.
Another scheme offered by post-offices is the National Savings Certificate (NSC) giving 6.8 percent interest annually. NSC has the benefit of tax deductions making it a desirable option amongst working women. The scheme comes in two tenures of five years and 10 years.
Other options in the Post-Office are the Time Deposit Scheme and Post-Office Monthly Income Schemes that offers options ranging from 1,2,3 and 5 years and tax saving benefits.
Bank Fixed Deposits or corporate deposits with Triple A rating can also be considered for investments. The rate of return varies with banks and corporates with no maximum limits.
A plethora of investment options are now available for women in India which can match their short term and long term financial goals. A proper plan, research, careful consideration, timing and understanding the investment instruments can lead to successful wealth creation by women.
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