You can get started with the right instruments without a large corpus by researching investments online. Further, issues like the gender-pay gap make investing even more crucial to your financial health.
In a survey conducted by DSP Mutual Fund, it was found that only 33% of women make independent investment decisions without being encouraged by their family. Unfortunately, such reservations can hamper your ability to generate wealth efficiently.
In today’s financial market, neither lack of knowledge nor insufficiency of liquid finance need be hurdles towards investing. You can get started with the right instruments without a large corpus by researching investments online. Further, issues like the gender-pay gap make investing even more crucial to your financial health.
Why should you invest?
Here’s a brief rundown on why women should invest and how to get started.
• Achieve financial goals
The returns from your investments can help you work towards your short- and long-term goals without depleting your savings. You can finance your child’s higher education, your wedding, an international holiday and even build an emergency fund by using the right instruments, like fixed deposit, mutual funds, stocks, equities, etc.
• Gain complete financial independence
As per the 2019 Monster Salary Index, women in India are paid 19% less than men, with only 1% improvement from 2018, proving that bridging the gender-pay gap is still a distant reality. Investing makes your money work for you, helping you gain financial independence and set up sources of additional income.
• Work toward your retirement corpus
Considering the slow pace in which the gender-pay gap is being bridged, saving for retirement can be a task. Therefore, to secure a sizeable corpus, it’s crucial that you build your savings through investments.
Why your savings are not enough?
The finances you park in a savings account while safe, grow at an interest rate of about 4%. With retail inflation in January 2020 spiking to 7.59%, an all-time high since May 2014, the worth of your savings is considerably reduced. In effect, when adjusted for inflation, you could be earning negatively when you simply ‘save’. The better route is to create an investment portfolio, whose yields combat and outmatch inflation.
How to start investing?
For women seeking smarter ways to grow their savings, here’s a rundown on how to get started.
• Do your research
Before you venture to make your first investment, learn the pros and cons of various instruments, know your prospective returns, and evaluate how the risk margins align with your financial and wealth creation goals. You can gain information on the internet and then take the help of a professional financial counsellor.
• Chalk out your financial goals
When strategizing, ensure that pay heed to women-specific factors, like income disparity and longer life expectancy than men. This way you can ensure that your portfolio yields sufficiently and in a timely manner too.
• Start investing early
Considering that women outlive their male counterparts by at least 6 to 8 years, making the decision to start now is always beneficial. This will help you grow your wealth through the power of compound interest over a longer period.
• Diversify your portfolio
To strike a balance between risk and returns, diversify your portfolio with market-dependent and safe instruments, so as to earn handsomely and hedge yourself against losses as well.
Where should you start investing?
Amid recent turmoil in the banking world, and the continuous market volatilities, it may get difficult to decide where to invest. Here’s a rundown on the best investment options to help you grow your savings.
• Secure your retirement with PPFs and NPS
Backed by the Government, a Public Provident Fund provides security and attractive returns, making it the perfect investment option for your post-retirement plans. It currently offers an interest rate of 7.90% and has a lock-in period of 15 years, which can be further extended in blocks of 5 years. This investment option is available to both professional working women and homemakers.
You can also invest in the National Pension Scheme, which employs a unique blend of equities, government bonds and corporate bonds. This too has a long lock-in period, making it ideal for post-retirement and long-term financial goals. Additionally, both these investment options provide tax benefits under Section 80C of the Indian Tax Act.
• Enjoy higher returns via equities
Investing in mutual funds via a Systematic Investment Plan (SIP), for instance, helps you march towards your goals with confidence, via the path of enhanced returns. You can also invest in an Equity-Linked Savings Scheme to enjoy tax exemptions under Section 80C of the ITA. However, the current market downturn has most investors worried, and you may encounter fluctuations in your returns.
• Get guaranteed returns by investing an FD
Company deposits like the Bajaj Finance Fixed Deposit offer returns at a rate of up to 7.80% for new customers and 8.05% for senior citizens. Along with a flexible tenor, ranging between 12 to 60 months, you can invest in an FD to meet your short- and medium-term goals. The Bajaj Finance FD also has to its credit ICRA’s MAAA and CRISIL’s FAAA ratings, and these point towards timely interest payouts.
It is worth mentioning that if you are a young earner, you can start investing through bite-sized contributions by setting aside a sum of Rs.5,000 or more every month. Through a Systematic Deposit Plan, you can then reap all the benefits that FDs offer, without having to make a large initial investment.
Whether you aim to maximise your savings, accumulate a bountiful corpus for your retirement, or gain financial independence, wisely investing your wealth will help you attain your goals. When considering FDs, remember that with the announcement of Long-Term Repo Operations and a potential repo rate cut in June 2020, now is the best time to secure an attractive interest rate. If you wish to partner with Bajaj Finance, simply book a Bajaj Finance online FD!