7 Healthy Investment Practices For Working Women

As career women and homemakers the ladies have to make investing decisions all their lives. Also, as they generate income in their families and save a certain portion of it monthly they need to allocate this saving in various asset classes. Saving money is the first step since without the discipline of living within our means we will not have any surplus to invest. One should stay ahead of the game. Therefore, cutting profligate expenditure is an approach that every family needs to incorporate.

In these decisions, whether one is a working woman or a homemaker they both have to be actively involved in ensuring that savings are created. This step is the first healthy practice for families to engage in. As it is 90% of purchase decisions in a home are usually made by the lady of the house. Added to that women are engaged in careers and have become entrepreneurs in multiple fields, therefore, understanding the dynamics of investing and finances is a prerequisite to a brighter and stable future. Savings and Investing are two sides of the same coin and contribute to the financial stability of the home.

As mentioned earlier asset allocation is very important to get right for all working women and homemakers. For this we need to understand our risk profile and then decide the distribution of the funds into equity markets, real estate, gold and bonds. Usually, working women and homemakers ignore investing in the equity markets. However, I think it is very important to see share market investing as a parallel income to their occupations. This is because share markets offer not only capital gains but also a source of dividend income which too can grow with the advancing balance sheets of the companies.

When it comes to the safety of share market as an option to invest for working women it will depend upon individual risk appetite. Risk is a perception. For the first time women investors Systematic Investing Plans could be seen as a good start and as the comfort factor increases larger investments in mutual funds or even direct investments in the stock market should be made after careful research.

Stocks outperform all other asset classes in the long run because they are productive assets. The underlying businesses of companies are growing gradually, covering the length and breadth of the country making useful products for consumers. When the companies’ profits grow, they reinvest them to grow their earnings further. As a stockholder, you ride the wave of expanding businesses.

 Also, the woman investor needs to embrace risk and see it as a tool to generate superior stock market performances. Our attitudes towards the markets are very crucial and we need to approach the markets as partners to a better future.

If you examine closely the beauty of the stock market is being a part owner of an organization and riding the future life of the company along with the entrepreneur and management of the firm. This requires patience and forbearance. Of course, you have to pick your stocks correctly which an investor can accomplish through basic stock market evaluation techniques.

As life expectancies have increased with the passing decades all investors need to carefully allocate investable surpluses. We do not want to make the mistake of having very little savings and investments in our advanced age. Also, most organizations in the private sector and government retire people around the age of 60. So having a well-thought-out plan of judicious investing from an early age needs to be viewed with great seriousness. If one has a pension from the government then it is fine but those that do not have pensions need to formulate a strategy to have monthly income covered through dividends, rents and even interest from fixed deposits. Further, there are a lot of pension plans formulated by Asset Management Companies and Insurance Companies that women investors can look into. A lot of them provide annuity plans after a certain age. 

 A few quick pointers to keep in mind for women investors as a long-term plan.

1. Diversify your investments. Don’t put all your eggs in one basket.

2. Be patient in your portfolio investments including mutual funds. Rome was not built in a day.

3. Cover your family with adequate life and medical insurance. A stitch in time saves nine.

4. Review your investments periodically preferably through a trusted financial advisor.

5. Start investing as early as possible to compound your returns. Good things come to those who wait.

6. Calculate your monthly expenses and ensure the dividends, rent and interest cover them.

7. Keep educating yourself.

If these principles are followed by homemakers and career women they will stay ahead of the curve and ensure a healthy, secure, fruitful and harmonious life for their family.

Anirudh Rathore demystifies individual investments in his new book, Investing Decoded (Penguin India). Views expressed by the author are their own