According to the World Economic Forum’s Global Gender Gap Report 2021 India has slipped 28 places to rank 140th among 156 countries and the gender gap has widened to an appalling 62.5 percent. The report also found that the estimated earned income of women in India is only one-fifth of men’s.

Given the disadvantageous situation that most women of the country find themselves in, it is of paramount importance for them to invest their money smartly. However, women have a long way to go in terms of financial literacy and inclusion also. Yes, positive changes are underway with the younger generation of women taking on the mantle of investing their hard-money judiciously without having to relegate the responsibility to male members. However, such women are a minority and majority of the Indian households consider testosterone a prerequisite for efficient management of finances. The situation is worse for older women, most of whom have known being granted a monthly allowance by their husband as the only legitimate link with the family’s finances.

Consequently, many women either feel they do not need to invest because it is the job of the husbands. The ones who do understand the importance of investments feel unsure as to how they can go about it. Lack of knowledge of the workings of financial products deters them from saving and investing confidently and many end up channelizing money in unsuitable asset classes.

Thankfully, times are changing. The advent of technology has fostered the creation of a host of user-friendly personal finance apps. Investing in a variety of instruments through these apps has become a smooth experience and most importantly, it has reduced the need for retail investors to reach out to brokers. This has benefitted female investors significantly.

Asha Khurana is a 45-year-old homemaker who joined the investment bandwagon two years ago. After hearing a few success stories in her friends circle, Khurana felt confident enough to take baby steps in investing her money. “I started my investment journey by investing in mutual funds. Two of my closest friends had been doing it and they gave me a sort of a demo on the process of investing in mutual funds through monthly SIPs (systematic investment plans). I found it extremely convenient, easy to understand and most importantly I could invest with small sums and not have to wait till I could accumulate a larger amount. For housewives like me, it can take forever to build a body of savings,” she narrates.

Urmila Singh, a financial planner at S9 financial planners says, “Even today women let their money sit idle by storing cash in a dabba or they use that to buy gold. But it is high time for women to move away from those entrenched notions and dabble in asset classes that can provide better returns. Those who are yet to start investing, should begin with figuring out their risk appetite and risk tolerance. Risk appetite indicates the level of risk an investor is willing to take, whereas risk tolerance refers to the risk an investor’s finances can actually handle.”

While it may seem daunting for many women to decode the level of risks they should take and the corresponding investment classes, the age of the internet has made it easier to understand these concepts and even seek expert advice. Khurana says, “There is ample information available on the internet and mutual fund houses have also made efforts to make quality information accessible for investors. Yes, I also sought expert advice but a lot of self-learning about the world of investments has been possible because of the internet. Also, as I have been investing in mutual funds which offer simplicity, diversification and flexibility, I feel more confident and less stressed about my investment strategies which was not the case previously when I tried investing in other instruments.”

Singh advises, “After you have gained a clear picture of your risk appetites and risk tolerance, the next step is the fund selection. This can be divided on the basis of short, medium or long term goals. For the short term debt funds are the best bet as they are highly liquid and you can park your money for one day or even one year. Hybrid funds are best suited for medium term goals as it provides a balanced exposure to equity and debt. If the time horizon is more than 7-10 years, then equity mutual funds are the way to go – they are a great fit for goals like retirement or children’s education. Start small in each asset class and once you feel confident and understand the process, attach your goals to your investments.”

If the path to being investment savvy can require a lot of learning for women investors, it can also help in unlearning perceptions about money that hold little value in this age. Khurana says, “More than anything else, my experiences in the arena of investing has made me realise that women can deftly manage finances without men and it is high time that the stereotype about matters of the wallet being a man’s responsibility gets shattered.”

Key takeaways

- Do not hesitate to seek help from professionals if you are an amateur investor. Money spent on availing guidance can save you from making erroneous investment decisions which have the potential to trigger colossal losses.

- If you are a woman who wants to start investing but find yourself lacking the confidence to do so, get your female friends and family members to also join you in learning the ropes of financial management. It would lend an element of fun to the whole process and staying motivated will be easier.

- Investing in mutual funds which offer simplicity, diversification and flexibility

- After you have gained a clear picture of your risk appetites and risk tolerance, the next step is the fund selection. This can be divided on the basis of short, medium or long-term goals.

- This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.

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