‘Don’t worry honey, this isn’t your cup of tea’… A man in your life must have said this to you in response to your queries on investment and saving. Even though women are said to be the best homemakers, they often get stuck to just FD’s as a money saving avenue. On this International Women’s Day, we help all the ladies to learn smarter ways of investment.
Kriti Maheshwari had to leave her stable job just because she was expected to be present everywhere during her marriage preparations. Then, post-wedding, she could not join anywhere else due to the untimed entry of guests. When she came to think of it, she had no reliable savings of her own after working for almost 8 years at a stretch. “At that point, two years back from today, I thought I just wasted every single penny that I earned as I did no savings. All this was because of lack of knowledge about saving schemes. Just like Kriti, women are mostly conditioned to be more ‘adjusting’ in nature rather than being financially strong. Women usually are the ones taking sabbaticals during weddings, for kids and so on. Their earning might not be stable and here comes the need of investment. With the changing times, it is needed that the ladies open up their investment avenues and broaden their horizon for a safer tomorrow.
Reasons to invest
If you feel that investment is rocket science, then hold on. It is plain logic and a little bit of research. For Sonia Malik, the word investment meant complications and endless paperwork. However, it was just a consultation that cleared all her doubts. “Even though I was working from the past 25 years, my savings were limited when compared to the years of work experience I hold,” she pondered. Just like Sonia’s realization spree, it is important to invest because:
• Finance is important. Men, as well as women of all ages, must spend time and effort towards financial planning.
• Women have impulsively managed finances at home within given resources for ages
• Finance is NOT mathematics and is not complex. It uses logic and is quite simple.
• Women tend to outlive men and may need to fend for their family alone for many years
Weather earning more or less – being an earning member of the society gives an individual a sense of independence. The income and autonomy must be cherished and preserved.
Investments to save taxes: It is always said to save smartly to save on your tax payments. Following are a few investment options for tax savings:
• Investments under Section 80C can save you up to 1.5 lakhs in Income Tax.
• Cumulative interest earned on savings account with a bank up to Rs.10,000 are tax free
• Interest paid on education loan for self/dependents provides tax break under section 80E
• Housing loan for self occupied or let out property under section 80C, 24,80EE gives a substantial break
• Medi-claim, medical insurance, medical expenses for self/dependents can give tax benefits under sections 80D, 80DDB,80DD,80U
• Consider taking benefits of HRA (living in a rented home) under section 80GG
• Donations & charity could give some respite under section 80G
• Deduction for income from royalty on patent or books under Sections 80RRB and 80QQB
• Individuals earning less than Rs.12,00,000 a year can also avail deduction for equity investments Rajiv Gandhi Equity
Savings scheme under section 80CCG
SIPs: If you think that your salary is nothing to save, SIPs or Systematic Investment Plans enables you to save even a smaller amount in the form of mutual funds. Go for two-three SIP’s and invest every month. You will realise the importance of your monthly sacrifice after five years for sure. When it comes to SIP, you don’t need lump sum amounts for investment. Even Rs 1000 is enough to buy mutual funds.
Insurance: It is important for the lady to understand that her husband’s insurance policy is not sufficient and you need one too. Following are the ways of investing:
• Life insurance: To cover all liabilities/loans, to cover financial needs of your dependents – child/parents/spouse
• Vehicle insurance where relevant
• Medical insurance or medi-claim: To cover medical expenses, to cover loss of income in case of medical problems
However, if you feel that this is complicated, these few tips could be of some help:
• Read through the financial risks covered in case of death, illness, and disability. Also, understand the duration of every premium to be paid.
• Compare what you actually need from the insurance policy.
• Obtain information from insurance companies on schemes available
• Don’t restrict your research to women oriented plans
Equity and debt: After investing in insurance and a retirement plan, the balance can be invested in avenues like the equity market, debt market, Government securities etc. These names only refer to investments you are already aware of. Following are the routes of investing:
•Investments in shares directly – you would need to educate yourself and monitor regularly
•Investments in shares or debt through mutual funds – would require less monitoring, but due diligence is necessary at the time of investment.
However, a little carefulness is always needed in such investment schemes:
•Simplicity is perhaps a good thing when it comes to selecting an investment product.
•‘Fill it, shut it, forget it’ is not the best policy.
•High returns come at the cost of high risk
•All equity is not risky
•Frequent churning of portfolio adds to the cost, so be sure of your target while investing
•After due research select good mutual funds or shares and invest for a long term
•Debt investments do not always indicate guaranteed returns, but they do indicate the certain safety of the funds.
•Asset allocation must be planned and adhered to at all times