Investing is not just for old men. Young women should invest too.
For far too long, women have abdicated their role in investing to the men in their lives. So, it had been their father, husband, brother or son, who had been taking care of their investments at various points of time. This has to come to an end because with changing times, women nowadays - a large percentage of them - are on their own.
Today it’s possible that women could be unmarried, divorced, widowed or in a relationship with another woman. In such cases, they need to manage their investments by themselves, right?
I do see a lot of women take up investing, and I know a small group of women who are serious investors in the equity markets. Not just traders, but serious investors with a long-term view. However, they are the exception, not the rule.
When it comes to pay structure, women are quite close to men today; and the good start goes on till they have a baby. At that stage, corporate India starts paying a woman less and women also justify that saying, “We now want to work part-time.” Sadly, corporate India has not learnt to reward women for this very important role. Sorry for digressing.
Where to start?
Sit with your parents when you are about 18 years of age and make sure that your 45-year-old mother also participates in the learning.
Learn the basics of a bank account, term and health insurance, mutual funds, credit card, compounding, income tax and retirement planning. This is of course not an exhaustive list, and is just indicative.
Once you start earning
A very important stage. Many people start approaching you now to buy an LIC policy, and similar stuff.
At this stage, learn to say ‘No’. Go and get yourself a simple TERM LIFE POLICY and say NO to anything else.
Get yourself (and your parents?) medical insurance. Start saving money aggressively. If you are staying with your parents, target saving about 90 per cent of your take-home salary.
At worst, you should save about 50 per cent of your salary. Remember, you are not paying for the food or the roof.
Convert savings into investments
Once you have saved some money - for the proverbial rainy day - you need to convert these savings to investments. You may have opened a small PPF (Public Provident Fund) account; keep it small.
For your tax benefits, you must involve a product called ELSS (Equity-Linked Savings Scheme). Do systematic investment in a good ELSS GROWTH OPTION. And this could be your first investment ever, congrats!
If you have money over and above this, look for an index fund with low management costs, or open a demat account and start buying low-cost ETF (Exchange Traded Fund), and build your portfolio. Start learning about mutual funds - this is also a very important step in your wealth accumulation.
Once the saver moves to an investor profile, she will look for help; it is but natural. Keep learning about investments.
Team up with right person
You now need a ‘financial’ planner. He need not be the first person you meet. Take your time and remember it is a serious start, and hence, take this work with utmost sincerity.
He is not an ‘investment’ planner; a Certified Financial Planner is expected to make sure that your budget, tax papers, philosophy statement, asset allocation, nominations, etc, are in place. An investment adviser is capable of helping you choose investments - equities, mutual funds, debt instruments - and go the whole virtual investment with him/her.
Your money, your investing. Just do it.
Keep your fingers crossed. Now, that does not give you the right to keep your eyes closed! Keep learning.
PV Subramanyam is the author of Retire Rich - Invest Rs 40 a day