What Kind Of Investments Should Women Look At To Secure Their Future?
As I sat down to pen this article, I tried recalling some of the conversations with women clients that I have had over the years and the striking realisation was the rarity of these. As I reflected on these, I also realised that most of them were quite astute. Not experts on the subject but very perceptive. One wishes there will be many more of these as more women take charge.
Gone are the days, where one needs to explain the importance of financial independence to women. I am sure most of the readers have evolved beyond. But are there gender-specific aspects of managing money? We think while the broader process remains the same, there are a few considerations that need to be distinguished.
Women tend to live longer than men, spend fewer years working so as to raise children and earn less than men. Effectively, the need to start planning finances early is far more important. There are scores of pages dedicated to the ‘Power of Compounding’. That combined with starting early is indeed the most powerful combination in money management.
For example, if you start investing Rs 2500 each month from the age of 20 and it grows at 9% p.a. you will have a corpus of about Rs 42.5 lakh at the age of 50. But if you start at 30 years to achieve the same corpus at 50, you will have to invest Rs 6700 each month. So if you haven’t been investing, start now and perhaps teach your kids to start early.
Studies globally suggest that women tend to save a higher percentage of their salaries than men – remember our mothers squirrelling away emergency money from their home budgets? But the key question is, do women make their money work as hard for them as they work to earn it? Imagine if our moms had actually started investing instead of tucking it away in the cupboard in an obscure purse or beneath their clothes! It is important to understand, choose a good advisor, understand your own appetite for risk and put together an investment plan.
Finally, anecdotally, we observe that men pivot in their careers far lesser than women do. And therefore, it is important that women visit their financial plan at every key milestone in their lives such as marriage, the birth of a child, a big change in their career etc.
Managing money is an important life skill and we need to take charge and impart our wisdom derived from our experiences to the next generation. Generation Z (those born after 1997) are considered most financially savvy because of their keenness on saving and their entrepreneurial spirits. They would be grateful to benefit from your wisdom.