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Tata Capital > Blog > Wealth Services > A complete guide to women’s financial independence

Wealth Services

A complete guide to women’s financial independence

A complete guide to women’s financial independence

Women are increasingly demanding the center stage in practically all aspects of life. As per recent reports, there is a surge in women investors in the mutual funds’ world as well. This is indicative of the fact that women are now taking investments more seriously and are making conscious choices when it comes to financial instruments. Women empowerment in a true sense is achieved only when women independently take their financial decisions.

1. Make independent and informed decisions:

Women despite being earning members in the family, often take a backseat when it comes to investment decisions. There is very low financial literacy among women, due to their lower level of knowledge, they tend to be more conservative as well.

Many women, do not take an active interest in decision making concerning investments. In fact, according to DSP Winvestor 2019 Pulse Survey, along with Neilson, it shows that only 1 in every 3 working women take their own financial decisions as compared to 64% of men.

Tip: There is enough educational material available that can be leveraged to gain enough knowledge to make independent and informed decisions. Read blogs of relevant industry experts to gain greater understanding.

Additional Read: Key steps to achieve financial freedom for women

2. Put yourself ahead and align your portfolio with your risk appetite:

Women remain the primary caretakers in a family and they tend to put their family ahead of every aspect of their life. This holds good even for financial planning. It is very rare that a mother would plan for her own upskilling ahead of planning her children's education.

A retirement plan would not even be a part of the financial plan. Often, some of the legitimate financial dreams of women take a backseat to cater to a family vacation or other frivolous expenses like festivities or parties.

Tip: Women, it's time to put yourselves first and then plan for the family’s financial well-being.

3. Being open to taking well-calibrated and calculated risks:

Women are inherently conservative. There is enough empirical evidence to suggest so. In a scenario where women have the option of optimizing their returns by assuming certain risks and availing fixed returns at no risk, they generally prefer the latter. This could be due to their lack of knowledge and their nurtured inherent nature to be meticulous in their approach.

Often riskier investment avenues require instantaneous decision making. Women process information thoroughly and tend to undertake decisions only after careful and complete consideration of all possible scenarios.

4. Start early, stay committed:

Women upon starting their working life, are so exhilarated that investing does not seem to crop up as an integral item. However, time is your dearest friend when it comes to investments. The earlier you start, the higher is the quantum of wealth you are likely to build over the long haul.

The magic of compounding can unfold more powerfully only when you give it ample time. It is also important the initial enthusiasm of investing does not fizzle out, you should continue to invest consistently to ensure that all your financial goals are achieved without a hitch.

Tip: Always align your investments with your financial goals, this way you will stay motivated to stay committed towards the same.

5. Cover your risks:

If you are an earning member actively contributing towards your household expenses, then you must avail yourself of a life cover. This will ensure that even in the unfortunate eventuality of yourself, the financial dreams of your family continue to be achieved.

For example, your children's higher education dreams should not come to a standstill. If you and your spouse have EMI commitments, then you should ensure that your life cover is sufficient enough to cover your part of the contribution towards the loan.

There has been a 40% rise in lifestyle ailments, especially for the population less than 45 years of age. Since women are more prone to illnesses, in today’s times they are constantly on the run and lead an extremely stressful life. Hence, it becomes important that you avail of health cover which will ensure that you can take care of your medical expenses without dipping into your investments.

Additional Read: Top 4 Investment Tips for Women to Start Their Financial Journey

6. Avail of all your tax breaks:

Tax savings can seem like a small amount in the larger scheme of things. However, it is these small amounts that will enable you to build a big corpus over the long haul.

To illustrate this, take the example of section 80C which allows a deduction of up to Rs. 1.5 lakh. If you are within the 30% tax bracket, then will end up saving Rs. 45,000.

Such savings can in turn be routed to your investments and could tantamount to Rs 32.5 lakhs at 12% CAGR for a tenure of 20 years! This could help you achieve your financial dreams in a stress-free manner.

Financial well-being is the key to a peaceful future and if you need assistance, experts are Tata Capital Wealth are there for you! Women achieving financial independence, which includes active participation in investment decision making, is the true essence of women's empowerment.

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