Traditionally, Indian women have shown their prowess in managing household finances and savings. It is time they play a bigger part in investments as well.
Most women are intrinsically good money managers. This is especially so if they are used to running the household on a strict budget. Recently, I overheard my mother discussing Ugadi sales with her cousin. While she felt Shop X was the best best, the cousin opined Shop Y to be better option. Budget-conscious women have variations of this very conversation everyday. It is a well-acknowledged fact that women are cautious spenders. Even many government welfare schemes are designed to engage women, given their role in managing household finances.
But just where do the pennies of a money-saving mom go? Women in villages form self help groups (SHGs) to regularly pool money and draw from it based on mutual requirement at the time of any emergency.
Traditionally, women in India invest their savings in kitty party or chit funds. Chit funds ensure that everyone's a winner, with a minimum monthly investment. It involves a group of women coming together and pooling their money in the chit fund. Upon a necessity arising, participants are allowed to draw either the full amount or a discounted amount.
Talking about investments made by women I remember this story about my grandmother which my mother shared with me. She wasn't employed and her only source of income was through selling milk. She would milk the cow herself. She would save up her only source income to purchase gold for each of her four daughters. This is pretty much the story of many Indian women even today. Whether the purchase of gold is a good investment option is debatable.
Apart from the non-recovery of making charges or the low perception in society of a person selling or pawning gold to pay off debts, the precious metal does not necessarily make for the best financial instrument. The high premium placed on the saving in terms of gold has restricted Indians from monetising the incremental value. Gold can be most easily termed as a dead investment.
Here, therefore, are some better investment options for women:
- A fixed deposit might be an ideal option for a risk-averse person. However, having a regular income is a guarantee.
- A mutual fund, although slightly more risky, can be well-managed money with returns linked to the stock market performance.
- A Systematic Investment Plan or SIP is the continuous investment of a pre-planned amount on a regular basis (typically monthly) in mutual funds. A certain number of units based on the current Net Asset Value are purchased.
- Government schemes like a National Pension Scheme and Public Provident Fund are tax-efficient investment options that are less risky than Mutual Funds and SIPs.
- Investing in health and medical insurance is a necessity. Although this is an expense, it is prudent that every woman procures a health and medical policy for herself and her family. This is the best way of financially securing those unwanted moments.
- Property is another investment option with the attractiveness of regular rental income. Having a tangible presence makes property desirable. However, the real return on investment in property can only be calculated at the time of sale.
Women have always played a key, if not primary, role in managing the household finances. Despite that, men are perceived to be better decision-makers when it comes to making an investment. So it is imperative for women to be aware of their options, so that they can break the glass ceiling and play a more active role in securing financial security for their families.