Chart a Financial Roadmap
We work hard and party hard – almost on schedule. Why then don’t we have the same approach to financial planning? Women may have traditionally shied away from taking on investment responsibilities, but it’s time we decode the financial code.
The right investment plan for a woman depends on her age, employment status, financial goals, time horizon and risk appetite. Experts say that mutual fund SIPs, fixed-income securites, gold, unit-linked investment plans and property are ideal investment avenues. Remember: It’s never a good idea to put all your investment eggs in the same basket!
Save Systematically
Systematic Investment Plans (SIPs) are an easy option to salt away money regularly. If regular and disciplined, you’ll reap the benefits in a few years.
Why
- Mutual funds allow you to buy units with small amounts (starting at Rs. 500 per month)
- SIPs do away with the need or effort to time the market.
- The biggest advantage is diversification, allowing investment in all major industries and companies.
Tax Saving
Tax-saving mutual funds (Equity Linked Savings Schemes) perform better as compared to traditional instruments such as life insurance policies, National Savings Certificate and Public Provident Fund.
Why
- In the long term, ELSS often give higher returns (between 15 and 18 per cent per annum).
- The lock-in period is three years as compared to the 6-year and 15-year lock-in for NSC and PPF respectively.
Gold Shining
Gold remains one of the most-loved investment options among women. The yellow metal is a safe bet but stay away from jewellery; opt for gold funds or coins/biscuits.
Why
- Political tensions, volatile equity markets and constraints on supply are likely to push up prices.
- Gold has a safe-haven status that no other investment has. Even countries hoard gold during crisis.
Stocks
Look for steady earnings and robust balance sheets. Stay invested in the market and market-related instruments only for the long term.
Why
If you get it right, the stock market offers the chance to make extremely high returns.
Real Estate
Property is a great investment. Apart from buying a property so you can cut the rental outgo, try investing in a small plot of land if you can.
Why
- Investing in property often generates more profits for the average investor than investing in the stock market.
- If you rent it out, a part of the rent money can go towards the EMI.
Insurance
Working woman or homemaker, every woman needs a life insurance policy to ensure that your family is financially well provided for. Another must is sufficient health cover, which is essential in case of exigencies.
Why
Insurance plans lighten the financial burden on the household in case of unforeseen events.
PPF
A PPF account can be opened in any post office and in some authorised banks. Any amount between Rs. 500 and Rs. 1 lakh per can be invested each year, either in your name or on behalf of a minor.
Why
Apart from being a tax-saving instrument, PPF allows you to earn assured and attractive returns that are tax-free.
The Break-Up
Equities: 20%-25%
Fixed Income Securities: 15%-20%
Property: 35%-40%
Cash: 5%-5%
Unit-linked Insurance: 15%-0%
Gold: 10%-10%
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