Why Should An Earning Woman Invest?
India is a multifaceted country and since times immemorial, women in the country preferred to remain confined to home. It was never a choice; rather the social circumstances compelled them to remain indoors. The society as a whole failed to recognize the worth of work done or service rendered by women. The situation has improved a lot in the recent years, thanks to the penetration of television, internet and social media. Now many women actively participate in business, politics and professional fields. They have grown to take decision independently. Earning women now controls income independently and contributes towards the financial needs of the family. Economic independence of woman plays a vital role in women empowerment. For this reason, each earning woman should make regular investment a habit.
An earning woman should invest mainly for four reasons. They are enumerated below:
1. Earning woman should create emergency fund to address financial exigencies
Creation of an emergency fund is a pre-condition for financial independence. Earning women often encounter unpaid leaves or career gaps during different stages of life. A newly married woman faces this often, when she is forced to take unanticipated leaves on account of difficulties associated with pregnancy. Sometimes an earning woman has to take extended unpaid leave to take care of the new born. To remain financially secure during such times, it is necessary that each woman create a contingency of emergency fund. According to experts, the emergency fund should be minimum 4-5 times of monthly income.
The best avenues to keep the emergency fund are savings bank account, bank deposits including recurring deposits and debt mutual funds, as emergency fund should have high liquidity and less volatility.
2. Financial goals vary according to life stages of earning woman
In many families, earning woman plays important role in ensuring financial stability of the family. Financial goals changes according to age. During the initial years of marriage, the financial goals may be acquiring a vehicle or visiting a foreign country. As life progresses, priorities change. Children’s higher education, acquiring a house and marriage of children gets prominence. Even though a person can avail bank finance for acquiring a house or for education of children, the applicant has to bring in margin amount. Further, habit of starting investments early makes you take advantage of compounding and reduce financial burden in later part of life.
To manage long term goals with huge financial liability, it is necessary to have goal based planning in the early years of employment itself. Seeking financial advice of financial planners will be highly useful to have an overall assessment of financial needs of the family and select appropriate instruments of investments. At present, mutual funds are emerging to be the best long term investment and solution oriented funds provides lot of options. However, the role of insurance and retirement planning also should get attention.
3. Every earning woman too retires one day
Planning for investment is a process that should coincide with first day of employment. Often retirement is considered as an event to happen years later and the importance of retirement planning gets ignored. Being financially independent even after retirement makes the life of every woman more meaningful. Planning for retirement much ahead of the retirement makes you to take advantage of compounding and create a large corpus with minimum effort. In the absence of retirement planning, you may find it difficult to maintain your life style.
Equity Linked Saving Scheme (ELSS), National Pension Scheme (NPS), Public Provident Fund (PPF), Voluntary Provident Fund (VPF) etc are various options available for employed woman for long term corpus creation. Solution oriented mutual fund schemes with focus on retirement is a good option. Employees in unorganized sector can take advantage of social schemes like Atal Pension Yojna (APY), Pradhan Mantri Shram Yogi Maandhan ( PMSYM ) etc.
4. Women are better investors than men
Experts rank women over men in the matter of investment. According to experts, conservatism and calculated risk taking approach enable women to take better investment decision. According to them, men are more impulsive in decision making and take higher risk in investment. Hence, for women it is ideal to depend on their inherent qualities of discipline rather than depending on men to take investment decision.
