How women can start their investment journey and benefit from a different investment strategy

For women to achieve financial independence, they must take money matters into their own hands. Considering the disparity in social and professional spheres, it is no surprise that financial empowerment features among the top three priorities for working women across age and socioeconomic groups. However, women cannot follow a cookie-cutter investment strategy because the scales are usually not tipped in their favour. Here’s why:

• Pay Gap: Indian women, on average, earn 20% less than their male counterparts, which means to make their money work better and generate comparable RoI, women need to scale up their savings and have a hands-on approach to investing.
•  Personal Goals: Many women do not have the opportunity or autonomy over certain personal goals they may have, such as saving for their higher education, foreign travel, marriage, or even an independent retirement. Women need a dedicated investment strategy that caters to their personal needs and aspirations in addition to the family’s shared goals. 
•  Fewer Active Years: Women are primary caregivers of the family. They are more likely to exit the workforce earlier than men, have multiple career breaks due to childbirth, and often prioritise the needs of the family. So, even if women save consistently as much as men, their investible corpus will not match up.
• Life Expectancy: Women also have a longer life expectancy than men, which means they will require their smaller pot of savings and investments to last longer post-retirement to manage all living and lifestyle expenses comfortably. Therefore, it is essential to account for these differences when charting goals and an effective investment strategy.

Here’s how you can get started on the right path to financial prudence and wealth creation.

1. Draw up a blueprint
 

You may want to buy a new car, start/expand your business, or build a house for yourself in the future. To achieve success in whatever you wish, it is essential to build a strategy that encompasses your financial milestones and defines actionable that will help you achieve them. Be sure to revisit your blueprint at least once every quarter. Your goals and aspirations may change over time, and this blueprint needs to account for that. Update and reassess your achievements and how far you have to go.

2. Create a robust budget
 

A strong and practical budget will form the backbone of your savings journey. Draw up a personalised budget that accounts for all your sources of income and standard expenses.

A common measure of allocation is to use the 50/30/20 rule. Manage all expenses within 50% of the monthly receivables, invest at least 30%, and keep the balance of 20% to enjoy and live a life queen-size. Feel free to tweak the ratio based on what suits you best but staying disciplined is critical if you wish to see your savings and investments grow over time. 

3. Reduce expenses and repay debt 
 

Taking charge of how and where you spend your money will make the process easier. The bulk of your fixed expenses, such as rent/EMI, house help, etc., will not change over the foreseeable future. Still, you can rein in variable expenses such as phone bills, eating out, socialising, and shopping! As far as possible, dial down on debt and prioritise the repayment of any loans and debts you have. Use your credit card judiciously and spend only as much as you can pay back in full. You could use one of the many budgeting apps available to help you stay on track.

4. Make smart investment choices
 

You work hard for your money, and your investments will too. Do your research online, consult a professional, and determine what investment products suit your pocket, risk appetite, and long-term goals. Equity and equity-related investments such as mutual funds are your best bet to compound wealth over the long term. Adopt value-generating investment strategies in the stock market that you can buy and hold for compounding gains. Similarly, systematic investments in mutual funds are pocket friendly and allow you to benefit from rupee cost averaging.

Create a balanced portfolio that helps you optimise your returns, provides some liquidity, and keeps delivering consistent performance. Review investments periodically to see what works and what doesn’t. Digitise your investment portfolio, so you don’t miss instalment deadlines, making monitoring easier.

5. Have insurance and an emergency fund
 

You should invest in a comprehensive health insurance plan if you haven’t done so already. It ensures that you don’t spiral into a financial abyss in the event of a health scare and receive the best treatment if it becomes necessary. If you have dependents, get adequate life insurance cover that will take care of your loved ones when you aren’t around. Insurance plans provide mental peace and additionally tax benefits too.

Similarly, be sure to put aside money for an emergency fund. This could be useful for any unexpected financial requirement.. It would be ideal if you could put 3-6 months’ salary in the emergency fund  Keep some money in hand but invest the majority in a liquid debt fund or sweep-enabled fixed deposit so that your deposit makes some money while idle and at the same time remain accessible.

Conclusion
 

Discipline and perseverance are critical tools in your arsenal that can help you achieve financial freedom. Metra Trust helps simplify a part of the journey by providing you with a comprehensive savings and investment platform all in one place. It offers a 3-in-1 banking, Demat and trading platform for your equity investments, a plethora of mutual fund options that you can easily invest through an ECS mandate, and high-interest rates of up to 6% on your savings bank account balance for your emergency fund. 

Metra Trust hopes to be the wind beneath the wings of millions of women like yourself who are on the path to personal and financial discovery with our Women Savings Account!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.