Press Esc to close

What women want in personal finance

Ramganesh Iyer, June 13, 2016 15:43 IST
It is a globally observed phenomenon that women have been less active in managing personal finance than men.

This statistic is even more stark in India, where less than 25% of active investors in any form of money management — mutual funds, stocks and insurance — are women. Is this a reflection of the fact that in India, historically men have been the main earners and have also taken on the role of managing family finances? Or is it a mindset issue that women prefer not to get actively involved? After all, of the five largest banks in India, three are headed by women!

Global studies on women versus men in finance have thrown some interesting findings. Yes, women do seem to be more conservative (i.e. take less risk) than men on finance. But this seems to be because they profess to be less knowledgeable about finance than men. In other words, women self-report that they know less about money, while men appear to over-estimate their knowledge of finance. After adjusting for financial literacy, these differences disappear.

In fact, women’s portfolios tend to perform as well or better than men’s over the long-term.

There are two other interesting differences. First, women are better at saving with goals in mind — for instance, retirement or a child’s education. Men, other the other hand, tend to think in terms of absolute performance of investments. Second, men tend to excessively trade/churn their money.

What does this mean for women managing their money?


First, financial security is an integral part of a woman’s independence, irrespective of her age and family status. Thus, for women reading this, here’s the verdict — your being interested and involved in basic personal finance is a necessity, not an option. A good starting point is to make sure all family assets — bank accounts, property, lockers, trading accounts, PPF and mutual funds — are either in joint names or have proper nomination. In today’s digital age, it is important all passwords are known to both spouses and there is a spread-sheet containing list of all assets.

Second, all earning members of the family need to take life (term) insurance in their individual names. This obviously includes earning women, who, in fact, get policies cheaper than their male counterparts.

Third, given the above differences in attitude, it is useful for women and men to plan their investments jointly. Women can ensure important goals are identified and budgeted for.
They can also curb any tendency in men to take excessive risk or trade. Given the time horizon of the goals, they can appropriately choose their products to get adequate returns.

Finally, when women are also actively involved in managing money, everyone in the family understands the overall family financial context. Thus, no one tends to overspend. Everyone stays within the budget and leads a lifestyle that is sustainable.

(The writer is the co-founder of fisdom.com)

Go to Top

Photo Gallery
Indian Air force paratroopers perform maneuvers at Bamhrauli Air station as the Indian Air Force ...

Indian Air force paratroopers perform maneuvers at Bamhrauli Air station as the Indian Air Force ...

Indian Mens Hockey team celebrates their birth in the final of the Hero Asia Cup 2017 with a...

Indian Mens Hockey team celebrates their birth in the final of the Hero Asia Cup 2017 with a...

Prime Minister Narendra Modi on the maiden voyage of Ro-Ro Ferry Service between Ghogha and Dahej...

Prime Minister Narendra Modi on the maiden voyage of Ro-Ro Ferry Service between Ghogha and Dahej...

India's Kuldeep Yadav celebrates the wicket of New Zealand batsman Kane Williamson during the...

India's Kuldeep Yadav celebrates the wicket of New Zealand batsman Kane Williamson during the...

External Affairs Minister Sushma Swaraj with Bangladesh Prime Minister Sheikh Hasina at a ...

External Affairs Minister Sushma Swaraj with Bangladesh Prime Minister Sheikh Hasina at a ...

Spain's Garbine Muguruza in action during her group stage match against Latvia's Jelena Ostapenko...

Spain's Garbine Muguruza in action during her group stage match against Latvia's Jelena Ostapenko...

Meng Meng, one of the two giant Chinese panda bears, is seen at the Zoo in Berlin, Germany July 5...

Meng Meng, one of the two giant Chinese panda bears, is seen at the Zoo in Berlin, Germany July 5...

Father Nicolas Maine blesses bikers' helmets during a

Father Nicolas Maine blesses bikers' helmets during a "Blessing of the Bikes" ceremony at Saint...

Arsenal's Sead Kolasinac in action with Everton's Nikola Vlasic during Premier League match at ...

Arsenal's Sead Kolasinac in action with Everton's Nikola Vlasic during Premier League match at ...

A volunteer uses a water hose to fight a wildfire near houses on the outskirts of Obidos...

A volunteer uses a water hose to fight a wildfire near houses on the outskirts of Obidos...

Like us on Facebook

Copyright 2017, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523
Powered by Yodasoft Technologies Pvt. Ltd.