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Ladies, here are 5 simple steps to your financial freedom

By Suren Kochhar
March 08, 2020 09:00 IST
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Here is a 5-step process for every woman as a guidepost while planning her financial journey, says Suren Kochchar.

An International Women's Day special.

Illustration: Dominic Xavier/Rediff.com

Lady, five simple steps to your financial freedom

Part I: The single woman's investment guide 

Part II: Investing for women: Choosing between risk and safety

Part III: 6 financial vows for women to retire at 50

Traditionally, men have known to lead the financial investment decisions for the family. However, with the gradual increase in the number of working women, both men and women are now participating in investment decisions jointly. Millennial women, through their increased participation in the workforce, have grown more independent and ambitious and are in control of the wealth they accumulate in their working years.

 

Furthermore, as women play a key role in the decision-making process for themselves and their families, they gather relevant knowledge of personal financing tools and manage their own investments.

Rightly said, 'A person without investment objective is like a traveller without a destination', this should be adopted by every woman taking her first step to financial independence this International Women's Day.

Financial independence is not about how much money someone has. It's about making the right decisions with the money one has at their disposal.

Considering the complexities and range of financial products and services existing in the market, it is essential for women to be well-versed with their investments.

It is widely argued that women investors are different than men, and how they choose to manage their financial lives is going to be different. Women tend to be more cautious about taking risks, so they invest less aggressively.

A good amount of initiatives is taken by marketing firms in the BFSI space to propagate women-oriented schemes, plans and about creating long term investment awareness to promote financial independence. However, as we discuss this initiative in length, here is a 5-step process for every woman as a guidepost while planning her financial journey.

First, it is a great thing to be financially independent. However, it is more important to stay committed to one's investment objectives.

As women are known to be spendthrifts, it is advised to stick to one's own investment amount allocated towards one's financial goals. There would be many distractions during the financial journey, which can delay your dream of attaining financial freedom.

Second, it is very important to withhold one's emotions while investing.

It is essential to understand the power of compounding and the benefits of investing in a diversified portfolio. Physical assets like gold serve a limited purpose and overdoing things beyond their ornamental value may prove futile in the long run.

Third, it is important to understand the difference between saving and investing.

Most people are satisfied in saving a major portion of their income to support their retirement. As rightly said, penny saved is a penny earned, but penny invested is a penny compounded. As an investor, one should not be too lazy in parking their funds except those to meet exigencies.

Instead, one should optimise their savings in medium to long term investment avenues available in the market depending upon one's risk profile and duration of the goal.

Fourth, don't get lured away bu lucrative returns as investing in a financial product without understanding its inherent features may prove nasty and can have a longl-asting impact on achieving your long-term financial goals. Going digital is advisable but it is a platform and not a product in itself.

Digital as a medium of investing has facilitated transactions in financial products and has reduced the time frame for an investor to even give a second thought before she could explore new investment avenues. However, it is important for an investor to ascertain the implication of investing in new investment avenues and co-relate with her investment objectives.

It is always better to keep investments simple and realistic than investing in hybrid products to achieve dual objectives at a time.

Lastly, to review investments is ideal but tracking it on a daily basis is not advisable.

Investments are meant for the long term; doing it in a systematic manner, particularly in instruments like mutual funds, might require periodical review to ascertain the implication of macro and micro factors on your investments.

It is not advisable to churn one's portfolio due to lesser returns in the short term.

In the process of redefining themselves, women have grown more independent and aware of their investments. Today, India is in a sweet spot as far as investment opportunities are concerned, and hence it is very essential to tap this opportunity and leverage it to one's own economic benefit.

Suren Kochhar is Senior President, Head of Sales and Marketing, YES Asset Management (India) Limited. The opinions expressed in this article are the author's own and do not reflect the view of YES Asset Management (India) Limited.

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