Flex your financial muscle
Navni Chawla talks to some financial experts to understand the dire need for women to invest their money smartly and become a master of their finances without depending on anybody.
“Financial literacy is the ability to make informed judgments and to make effective decisions regarding the use and management of money.”
—NFER, National Foundation for Educational Research.
A woman is a full circle. She carries in her the power to nurture, create, transform, and build. She is a complete world in herself. Time after time, women have proved their mettle in every field, be it running the household successfully or an organisation, with full zeal and power. As women are growing at par with men these days and maintaining an equal stature financially, so are the investment options for women.
Traditionally, men have taken all the important financial decisions in the household. While there’s nothing wrong with that, women need to take control of their finances as well. As women of all ages and backgrounds struggle, earn money, access education, care for their families, and plan retirement, they too need to take control of their budget and finances to make important life decisions and meet their goals.
Did you know that not even 15 percent of women make their own financial decisions and that not even 25 per cent of women invest in the stock market?
“Another study shows the stats that more than 80 per cent of women are not able to clear a financial literacy quiz. It also says that women are three times more likely to accept that they cannot save enough for retirement as compared to men. As per the S&P Global FinLit survey, worldwide, only 30 per cent of women are financially literate compared to 35 per cent of men. Disparities in financial knowledge are largely due to less-educated women and low-income individuals,” says Purnima Madaan, a leading digital entrepreneur.
Low financial literacy in women can lead them to be easily exploited, especially by mortgage finances, fraudulent schemes, and debt traps. Research has shown that women have a longer lifespan than that of men. And senior women are more likely to end up in poverty than men because of their poor choices. Debt control among women entrepreneurs can be easily improved by educating them to help them make more informed decisions financially as well as generally in life.
There are infinite reasons for making women financially literate. To begin with, investing early in their life makes them more liberated and self-reliant. It also changes the way they are looked at (as burdens) by some people.
Alpa Shah, social entrepreneur and the author of the book The Business Women, says, “I worked for more than 25 years as a corporate employee, and there came a day when I decided to quit it all to become a social entrepreneur. This became possible because I was financially free and could manage my cash flow easily. I started investing early and, thanks to the power of compounding, today I am a happy entrepreneur with a business that keeps growing as I grow. Our ability to make money is among the most potent sources of courage and confidence. I have found that women entrepreneurs are more passionate about their work and ambition compared to their male counterparts. Women are better leaders because of their emotional stability and their ability to juggle a variety of tasks. However, the one area where most women lag is financial acumen, which is where the problem starts.”
She also believes that having an understanding of numbers and accounts as well as high business acumen is more important than looks and personality. Traditionally, the ability of a man to create wealth and a woman’s outer beauty were considered measures of their worth. The times are changing rapidly now and so is this old perspective.
Alpa Shah also talks about financial hygiene which means never mixing one’s business and personal finances. She says, “As an entrepreneur, you should keep yourself updated by reading books, financial reports, and also watching the market in which you operate. You should also have a thorough understanding of business terms like capital, interest, profit, investment, and balance sheet. This knowledge helps the entrepreneur to operate from and make a decision based on cold facts. A financially aware business owner operates from knowledge and is, therefore, better placed to make intelligent decisions.”
Now let’s look at some investments women should seriously consider making:
Life and health insurance
“Having proper health insurance in place is the first thing a woman should do when we talk about investments. Investing in health is the biggest investment. Today, the policies are much more friendly, and purchasing the right ones at the right time is important,” says Dipika Jaikishan, COO of Basis, a financial education and empowerment platform for women. Single or divorced mothers must have life and health insurance because they may have children who are dependent on them or parents to support. For a beginner, the following three health insurance coverage plans, which offer some great policies and benefits, are some of the best options to choose from:
-
Niva Bupa Reassure
-
ICICI Health Shield
-
HDFC Optima Restore
Securing yourself with life insurance is also of primary importance. These are the top three simple and affordable life insurance plans that give back 10–20 times your annual income returns:
-
Kotak e-Term
-
HDFC Life Click 2 Protect
-
ICICI Pru iProtect Smart
The pandemic made one realise the significance of having adequate risk cover against unforeseen afflictions. Earlier, a five lakh-rupee medical claim policy was the norm. But later, insurance companies launched user-friendly features to cater to ground realities. For instance, you may be surprised to know that you can get a fifty lakh-rupee policy at an annual cash outgo of just ₹12,000/-. This much risk cover will take care of atrociously high hospital bills. Being preoccupied with official assignments and meeting one target after another may deprive you of awareness regarding cost-effective investment options.
National Savings Certificate (NSC) scheme
It is heartening to see how financially independent women are now investing their money smartly.
“Since my childhood, I have been seeing my mother save money from here and there. She would put the money in fixed deposits or inner circle kitties. I inherited that trait of saving money from her for any unforeseen situations that may arise in life. And today, I see that there are a number of ways to invest money: government schemes, bank schemes, stocks, bitcoin, crypto, etc. But it’s important to find out the best and simplest ways to invest for healthy returns tomorrow,” says Anandita, a finance manager with a tech start-up, IFCO.
The National Savings Certificate scheme is one of the safest investment schemes available in post offices that offer high returns. In this, one is allowed to invest any amount of money, but one can only withdraw after the completion of the maturity period, except in situations like the death of the certificate holder or joint holder. This is an ideal scheme, especially for working women, as it helps to save cash for a period and earn great interest regularly.
Emergency fund
“Making investments is important, but it is critical to choose the correct investment tool,” says Dr Ranjit Singh, an insurance advisor with MDRT. Each individual is a unique human being with specific needs and compulsions. A trustworthy advisor can do a diligent analysis to help you meet your short-term and long-term financial goals. For instance, the needs of an unmarried employed female will be quite different from the concerns of a married lady with children, who could range from toddlers to grown-ups.
Today, youngsters armed with credit cards indulge in impulsive buying at malls or make online purchases that offer cash-backs and discounts, which, in some cases, they realise could have been avoided. Therefore, a viable strategy is called for to meet our needs as well as aspirations. Let us start with a roadmap for an unmarried employed person to have a steady income.
Dr Ranjit shares, “A rule of thumb is that, as a priority, she should accumulate an emergency fund equivalent to six months’ salary, just in case she loses the present job. This step will avoid dependence on one’s parents or relatives. But, such an eventuality is rarely on one’s mental radar. This emergency fund can be in one’s savings bank account, but in a bank other than the salary account.”
He also warns everyone who wants to get rich quickly. He says that aspiring to become rich is not bad; it’s good to meet your needs, wants, and aspirations. However, when one tends to adopt untried means to get rich quickly, caution is called for. Putting money in crypto-currency had become an in thing for both females and males, ignoring warnings by the RBI. A country like El Salvador, which adopted Bitcoin as its national currency two years ago, came to grieve this year after the crypto meltdown.
Dr Ranjit also shares that women could save taxes via investments. “How would you feel if someone tells you that you can save substantial tax by putting your money in some plans while getting good profits? Wow! Certainly, it’s the best of both worlds,” he says smilingly.
Public Provident Fund (PPF)
One of the most reliable government-backed savings plus investment schemes, the Public Provident Fund, can be counted as a benchmark in investment options for women who do not want to risk their hard-earned money and want decent returns on their investments after a considerate tenure. Below are some of the top features that will attract women investors to invest in PPF:
1. Mostly, all the banks and financial institutions provide a PPF account.
2. PPF is an investment plus savings plan backed by the government.
3. PPF is a risk-free investment option that offers decent fixed returns to all classes.
4. Currently, as of the financial year 2022-2023, the rate of interest offered under a PPF investment is 7.1 per cent annually
5. PPF comes with a 15-year lock-in period that can be stretched by five years at the end of 10 years
6. The annual minimum deposit to be invested in a PPF account is ₹500/-.
7. The annual maximum deposit that should be put in a PPF account is ₹1,50,000/-.
8. PPF comes with many tax benefits under Section 80C of the Income Tax Act, 1961.
Mutual fund investments through organised investment plans
Investments made through mutual funds either work on the lump sum method or through the Systematic Investment Plan (SIP) method. Most of the time, women investors go for the SIP method because of the following reasons:
1. Monthly investments, sometimes as little as ₹500/- can be easily deposited in their desired mutual fund account.
2. Unlike the one-time lump sum investment method option, an investor can go for a monthly or quarterly deposit plan for a defined tenure to get greater returns.
3. The SIP method diversifies the portfolio of the investor as one can choose multiple SIPs as compared to the lump sum method.
4. Investment in mutual funds is fit for all types of women investors considering their low to medium risk-taking appetite
Fixed deposits (FDs)
Another gamble-free investment option for women is fixed deposits. They are also available in mostly all financial institutions and banks, just like the PPF option. With interest rates varying from one bank to another and minimal risk involved, fixed deposits can be considered as your next investment option for good and guaranteed returns in the future. Some of the details about fixed deposits (which differ from bank to bank) are listed below:
Financial emancipation of women
Navni Chawla talks to some financial experts to understand the dire need for women to invest their money smartly and become a master of their finances without depending on anybody.
“Financial literacy is the ability to make informed judgments and to make effective decisions regarding the use and management of money.”
—NFER, National Foundation for Educational Research.
A woman is a full circle. She carries in her the power to nurture, create, transform, and build. She is a complete world in herself. Time after time, women have proved their mettle in every field, be it running the household successfully or an organisation, with full zeal and power. As women are growing at par with men these days and maintaining an equal stature financially, so are the investment options for women.
Traditionally, men have taken all the important financial decisions in the household. While there’s nothing wrong with that, women need to take control of their finances as well. As women of all ages and backgrounds struggle, earn money, access education, care for their families, and plan retirement, they too need to take control of their budget and finances to make important life decisions and meet their goals.
Did you know that not even 15 percent of women make their own financial decisions and that not even 25 per cent of women invest in the stock market?
“Another study shows the stats that more than 80 per cent of women are not able to clear a financial literacy quiz. It also says that women are three times more likely to accept that they cannot save enough for retirement as compared to men. As per the S&P Global FinLit survey, worldwide, only 30 per cent of women are financially literate compared to 35 per cent of men. Disparities in financial knowledge are largely due to less-educated women and low-income individuals,” says Purnima Madaan, a leading digital entrepreneur.
Low financial literacy in women can lead them to be easily exploited, especially by mortgage finances, fraudulent schemes, and debt traps. Research has shown that women have a longer lifespan than that of men. And senior women are more likely to end up in poverty than men because of their poor choices. Debt control among women entrepreneurs can be easily improved by educating them to help them make more informed decisions financially as well as generally in life.
There are infinite reasons for making women financially literate. To begin with, investing early in their life makes them more liberated and self-reliant. It also changes the way they are looked at (as burdens) by some people.
Alpa Shah, social entrepreneur and the author of the book The Business Women, says, “I worked for more than 25 years as a corporate employee, and there came a day when I decided to quit it all to become a social entrepreneur. This became possible because I was financially free and could manage my cash flow easily. I started investing early and, thanks to the power of compounding, today I am a happy entrepreneur with a business that keeps growing as I grow. Our ability to make money is among the most potent sources of courage and confidence. I have found that women entrepreneurs are more passionate about their work and ambition compared to their male counterparts. Women are better leaders because of their emotional stability and their ability to juggle a variety of tasks. However, the one area where most women lag is financial acumen, which is where the problem starts.”
She also believes that having an understanding of numbers and accounts as well as high business acumen is more important than looks and personality. Traditionally, the ability of a man to create wealth and a woman’s outer beauty were considered measures of their worth. The times are changing rapidly now and so is this old perspective.
Alpa Shah also talks about financial hygiene which means never mixing one’s business and personal finances. She says, “As an entrepreneur, you should keep yourself updated by reading books, financial reports, and also watching the market in which you operate. You should also have a thorough understanding of business terms like capital, interest, profit, investment, and balance sheet. This knowledge helps the entrepreneur to operate from and make a decision based on cold facts. A financially aware business owner operates from knowledge and is, therefore, better placed to make intelligent decisions.”
Now let’s look at some investments women should seriously consider making:
Life and health insurance
“Having proper health insurance in place is the first thing a woman should do when we talk about investments. Investing in health is the biggest investment. Today, the policies are much more friendly, and purchasing the right ones at the right time is important,” says Dipika Jaikishan, COO of Basis, a financial education and empowerment platform for women. Single or divorced mothers must have life and health insurance because they may have children who are dependent on them or parents to support. For a beginner, the following three health insurance coverage plans, which offer some great policies and benefits, are some of the best options to choose from:
-
Niva Bupa Reassure
-
ICICI Health Shield
-
HDFC Optima Restore
Securing yourself with life insurance is also of primary importance. These are the top three simple and affordable life insurance plans that give back 10–20 times your annual income returns:
-
Kotak e-Term
-
HDFC Life Click 2 Protect
-
ICICI Pru iProtect Smart
The pandemic made one realise the significance of having adequate risk cover against unforeseen afflictions. Earlier, a five lakh-rupee medical claim policy was the norm. But later, insurance companies launched user-friendly features to cater to ground realities. For instance, you may be surprised to know that you can get a fifty lakh-rupee policy at an annual cash outgo of just ₹12,000/-. This much risk cover will take care of atrociously high hospital bills. Being preoccupied with official assignments and meeting one target after another may deprive you of awareness regarding cost-effective investment options.
National Savings Certificate (NSC) scheme
It is heartening to see how financially independent women are now investing their money smartly.
“Since my childhood, I have been seeing my mother save money from here and there. She would put the money in fixed deposits or inner circle kitties. I inherited that trait of saving money from her for any unforeseen situations that may arise in life. And today, I see that there are a number of ways to invest money: government schemes, bank schemes, stocks, bitcoin, crypto, etc. But it’s important to find out the best and simplest ways to invest for healthy returns tomorrow,” says Anandita, a finance manager with a tech start-up, IFCO.
The National Savings Certificate scheme is one of the safest investment schemes available in post offices that offer high returns. In this, one is allowed to invest any amount of money, but one can only withdraw after the completion of the maturity period, except in situations like the death of the certificate holder or joint holder. This is an ideal scheme, especially for working women, as it helps to save cash for a period and earn great interest regularly.
Emergency fund
“Making investments is important, but it is critical to choose the correct investment tool,” says Dr Ranjit Singh, an insurance advisor with MDRT. Each individual is a unique human being with specific needs and compulsions. A trustworthy advisor can do a diligent analysis to help you meet your short-term and long-term financial goals. For instance, the needs of an unmarried employed female will be quite different from the concerns of a married lady with children, who could range from toddlers to grown-ups.
Today, youngsters armed with credit cards indulge in impulsive buying at malls or make online purchases that offer cash-backs and discounts, which, in some cases, they realise could have been avoided. Therefore, a viable strategy is called for to meet our needs as well as aspirations. Let us start with a roadmap for an unmarried employed person to have a steady income.
Dr Ranjit shares, “A rule of thumb is that, as a priority, she should accumulate an emergency fund equivalent to six months’ salary, just in case she loses the present job. This step will avoid dependence on one’s parents or relatives. But, such an eventuality is rarely on one’s mental radar. This emergency fund can be in one’s savings bank account, but in a bank other than the salary account.”
He also warns everyone who wants to get rich quickly. He says that aspiring to become rich is not bad; it’s good to meet your needs, wants, and aspirations. However, when one tends to adopt untried means to get rich quickly, caution is called for. Putting money in crypto-currency had become an in thing for both females and males, ignoring warnings by the RBI. A country like El Salvador, which adopted Bitcoin as its national currency two years ago, came to grieve this year after the crypto meltdown.
Dr Ranjit also shares that women could save taxes via investments. “How would you feel if someone tells you that you can save substantial tax by putting your money in some plans while getting good profits? Wow! Certainly, it’s the best of both worlds,” he says smilingly.
Public Provident Fund (PPF)
One of the most reliable government-backed savings plus investment schemes, the Public Provident Fund, can be counted as a benchmark in investment options for women who do not want to risk their hard-earned money and want decent returns on their investments after a considerate tenure. Below are some of the top features that will attract women investors to invest in PPF:
1. Mostly, all the banks and financial institutions provide a PPF account.
2. PPF is an investment plus savings plan backed by the government.
3. PPF is a risk-free investment option that offers decent fixed returns to all classes.
4. Currently, as of the financial year 2022-2023, the rate of interest offered under a PPF investment is 7.1 per cent annually
5. PPF comes with a 15-year lock-in period that can be stretched by five years at the end of 10 years
6. The annual minimum deposit to be invested in a PPF account is ₹500/-.
7. The annual maximum deposit that should be put in a PPF account is ₹1,50,000/-.
8. PPF comes with many tax benefits under Section 80C of the Income Tax Act, 1961.
Mutual fund investments through organised investment plans
Investments made through mutual funds either work on the lump sum method or through the Systematic Investment Plan (SIP) method. Most of the time, women investors go for the SIP method because of the following reasons:
1. Monthly investments, sometimes as little as ₹500/- can be easily deposited in their desired mutual fund account.
2. Unlike the one-time lump sum investment method option, an investor can go for a monthly or quarterly deposit plan for a defined tenure to get greater returns.
3. The SIP method diversifies the portfolio of the investor as one can choose multiple SIPs as compared to the lump sum method.
4. Investment in mutual funds is fit for all types of women investors considering their low to medium risk-taking appetite
Fixed deposits (FDs)
Another gamble-free investment option for women is fixed deposits. They are also available in mostly all financial institutions and banks, just like the PPF option. With interest rates varying from one bank to another and minimal risk involved, fixed deposits can be considered as your next investment option for good and guaranteed returns in the future. Some of the details about fixed deposits (which differ from bank to bank) are listed below:
Features Details
1. Rate of interest 1.85% to 6.95% per annum
2. Minimum deposit amount ₹1,000/-
3. Investment period 7 days to 10 years
4. Interest compound frequency Annually, quarterly, or monthly
5. Partial withdrawals Available with a fine
6. Premature closure Available with a fine
Gold
One of the most conventional, ancient, and guaranteed return options prevalent amongst the women of India is an investment in gold. Looking at the evolution and journey of gold in the past 50 years or so, no one can deny that buying gold in any form has not been a beneficial type of investment for them. Even at the time of inflation when the market saw major dips in prices of goods, gold has always experienced a thrust that makes it the investment of the century every single time.
National Pension System (NPS)
Launched by the Government of India and registered with the Pension Fund Regulatory and Development Authority (PFRDA), National Pension System is one of the best government-backed savings schemes for women. Women with sufficient funds after their retirement who are willing to invest and do not wish to take big-leap financial risks should blindly choose the National Pension System investment option.
There are two types of NPS available: Tier-I (for any Indian citizen between the age of 18 and 65 years) and Tier-II (only the existing members of the Tier-I account).
So ladies! It’s time to take the reins of your finances into your own hands, be financially literate, build a comprehensive financial portfolio, and grow your wealth, whether or not you have a man by your
1. Rate of interest 1.85% to 6.95% per annum
2. Minimum deposit amount ₹1,000/-
3. Investment period 7 days to 10 years
4. Interest compound frequency Annually, quarterly, or monthly
5. Partial withdrawals Available with a fine
6. Premature closure Available with a fine
Gold
One of the most conventional, ancient, and guaranteed return options prevalent amongst the women of India is an investment in gold. Looking at the evolution and journey of gold in the past 50 years or so, no one can deny that buying gold in any form has not been a beneficial type of investment for them. Even at the time of inflation when the market saw major dips in prices of goods, gold has always experienced a thrust that makes it the investment of the century every single time.
National Pension System (NPS)
Launched by the Government of India and registered with the Pension Fund Regulatory and Development Authority (PFRDA), National Pension System is one of the best government-backed savings schemes for women. Women with sufficient funds after their retirement who are willing to invest and do not wish to take big-leap financial risks should blindly choose the National Pension System investment option.
There are two types of NPS available: Tier-I (for any Indian citizen between the age of 18 and 65 years) and Tier-II (only the existing members of the Tier-I account).
So ladies! It’s time to take the reins of your finances into your own hands, be financially literate, build a comprehensive financial portfolio, and grow your wealth, whether or not you have a man by your side.