There has never been a better time to be a woman than now. In the past few decades, women have fought for greater equality with their male counterparts. This has led us to an unprecedented time in history where today’s women have greater education and opportunity.
With the money women earn, they require investment strategies that increase their wealth. However, many women tend to shy away from this idea. Many women say, “I am not very good at saving or investing.” This is a shy admission that they don’t know if their money is working for them.
This article details ways women can start investments for their future.
However, before going through these steps, it is important for women to feel at ease with their money and confident about managing wealth. Moreover, it is important to leave behind all the misconceptions regarding money and investments.
Why should women invest their money?
Investing is a fantastic strategy for women to increase their wealth and achieve their goals.
For instance, a working woman can allocate a percentage of her discretionary income each month and invest it in the Equity & fixed income markets. This could aid her in investing for various goals, such as a trip, a degree, a car, or even extra cash for a rainy day.
However a woman does not need to be employed to invest in markets. You might be a stay-at-home mum. Even under this scenario, investing in the markets is a great way to build a lumpsum amount for long-term family goals.
In addition, women tend to have more career breaks to raise their young children or look after their elderly parents. Moreover, women tend to live longer than their male counterparts. So, women need to start investing as early as possible.
Wealth Creation Process for Women
It is important to remember that creating wealth through investments is a skill that takes time to perfect. However, following the steps outlined in the below paragraphs can help you with the process.
Do your homework
Reading up on different investments and figuring out which ones are best for you is an excellent first step. Although there are no guarantees in investing, the more informed you are about your options and the different investment policies and practices, the better prepared you will be when making financial decisions.
Plenty of online resources give helpful information about investing options and current market trends, so take advantage of them whenever you can. You can also speak with a professional familiar with investing if you feel like you need some guidance.
Taking control of your finances
It is commonly seen in most Indian households that women outsource the investment duties to their male family members, such as their husband or father. As a result, most women remain unaware of the financial nuances and the required details.
Know where you stand financially
Before you begin your investment and wealth creation journey, it is essential to know where you stand. To do that, you can check your cash flow situations and note your monthly inflows and outflows. Monthly inflows can be your salary, rental income and other sources of money. Examine your expenditures and divide them into discretionary and non-discretionary costs. Non-discretionary expenses can include your rent, home loan payments, children’s school fees, grocery bills, etc., whereas discretionary costs are those for pleasures and entertainment.
You can use this to determine how much money you have to invest and where you can cut costs to increase your savings. This serves as the foundation for developing a monthly budget.
Know your reason or ‘why’
Knowing and deciding your ‘why’ is critical before you make any financial plan.
What goals do you have for the next year, the next five years, and perhaps the next ten? Your objectives could include saving for retirement, purchasing a home in seven years, or taking a trip to Europe next year.
It is essential to identify your financial goals so that you can quickly determine how much you want to and can invest. Your financial plan will be driven by your “why.”
Knowing your ‘why’ also makes it easy to stay invested and fulfil your goals.
Have an emergency fund
It is easy to find yourself in an emergency—whether it’s something life-changing like the loss of your job, a car accident, or something minor but still costly like getting a flat tire or having to pay extra for your last-minute flight. The good news is that there are plenty of ways for women to ensure they always have the financial means to get through these unexpected costs.
An emergency fund is a cash reserve that allows you to pay for such expenses without additional debt. It can be created using savings, funds kept in a bank account, or by selling some assets. Ideally, your emergency fund should cover three to six months’ worth of living expenses, but that may be difficult for many people. A more attainable goal is accumulating enough money to pay out of pocket for an emergency room visit or car repair without taking on additional debt.
To maintain an emergency fund, you must save regularly. You might consider setting up an automatic withdrawal from your salary account to a different savings account or creating a liquid fund for emergencies. Consider cutting back on expenses if your cash flow does not allow this arrangement.
Get adequate insurance
Why is it important for women to have a life insurance policy? For some, the answer might be obvious: because life insurance is something that will ensure their loved ones are financially taken care of in the event of their death. But, for others, that answer may not be so clear. Life insurance is an investment in your future—an investment you shouldn’t ignore. So, why do you need a life insurance policy?
For most people, a life insurance policy doesn’t come about until you start a family—which means that it can be easy to put aside and forget about trying to get through the day-to-day stresses of work and home life. However, buying a life insurance policy isn’t just something you do once and then forget about it. It’s something you should seek out when you’re young and healthy; it’s something you should keep up with as you age; it’s something that can make a huge impact on your future.
Why buy a life insurance policy? For one thing, if you have children or other dependents who rely on your income to survive, having some life insurance will help you have a good life after your untimely demise.
A health insurance policy is almost important for women. Women face more health risks than men. Heart disease is our number one killer, followed by cancer and stroke. These are the significant reasons why it’s so crucial for women to have life and health insurance.
Managing financial portfolio
Women are known to be the more conservative investment partners. While this shouldn’t surprise anyone considering the historical gender roles of men and women in the workplace, it can pose a problem for them when managing their financial portfolios.
And this all leads us back to the question, “How can women manage their investment portfolio?” The first step is to know your strengths. Women who thrive in a conservative environment should stick to funds most appropriate for investors with a low tolerance for risk. They may look at investing in companies more likely to pay dividends, like real estate investment trusts and utilities. A focus on income generation will help keep portfolios growing even during market volatility.
Wealth creation
Wealth creation is essential for women who want to build their lives in a way that best suits them, fulfil financial goals and build a sizeable retirement corpus.
There are several ways for women to take charge of their financial futures and create wealth over the long term.
The best time to start investing in creating wealth is now. Early investment is advantageous for investors because compounding effects increase over time.
Mutual funds are one of the easiest and most hassle-free investment options that women can invest for their future. Mutual funds invest in asset classes such as equity, debt and commodities. Mutual funds are a great way to invest over the long term. They offer diversity and professional management.
Mutual funds allow people who don’t have the knowledge and expertise to pick individual stocks to invest in stocks. Mutual funds allow investors to buy instruments such as stocks through a single transaction instead of locating an individual stock on their own and then purchasing it.
And Systematic Investment Plan(SIP) allows investors to invest in mutual funds regularly. So, you don’t need much money to invest in mutual funds, but you can end up with a sizeable amount by investing in mutual funds through SIP.
Here, we have outlined the steps women can take to create wealth over the long term and achieve financial goals.
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