The ultimate guide to investment for single women

Here is the ultimate guide to investment for single women

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In today’s progressing world, gender discrimination is a taboo as men and women are equal in every way. You look at various professions like doctors, lawyers, fund
managers, CEO’s, Research, Designing, Software, etc, women are progressing in every direction. But there is a general misconception that men are better when it comes to
investments.

We must not forget the greatest Indian savers are our grandmothers and mothers, as they have been saving from their household expenditures every month, only to declare these savings as the most desired surprise in needed moments for the family.

Now, before we dive deep in certain investment options, would like to highlight a few important aspects.

We must build risk tolerance, as it is extremely important to have the patience and tolerance in managing risk. Beating the market benchmark returns will require some risk appetite and more importantly the tolerance factor.

Never build a relationship with money, as in that case the investments may not be invested wisely and will primarily find a way towards very low-risk products like Fixed Deposits etc.

As in life and in every other aspect we define our goals, similarly, we need to define our financial goals as it will help us in identifying our risk-taking ability, choose prudent investment products and the tenure of our investment.

Are you reading enough?

Reading journals, newspapers, watching financial news channels, etc., will constantly increase our financial world awareness and will help us in making informed decisions on our investments. We must not clone, what works for your friend or your colleagues or a family member may not always work for you! Hence, defining our financial goals is critical to understand that one size doesn’t fit all. 

We have several investment options like:

Public Provident Fund: A public provident fund (PPF) account is a long-term investment option that falls under Exempt-Exempt-Exempt (EEE) category. It provides income tax deduction u/s 80C for the amount invested (subject to a limit of Rs 1.5 lakh a year). Interest received is exempt from tax and there is no tax on the amount received on maturity of the account either. In view of the tax benefits offered, many investors open PPF accounts with their bank/post office to build a sizeable corpus. PPF accounts have a lock-in of 15 years. On maturity, the investor has the option of either to withdraw the proceeds and close the account or to continue the account for a block of five years.

National Pension Scheme: The National Pension Scheme is a social security initiative by the Central Government. This pension program is open to employees from the
public, private and even the unorganized sectors with an exception of those from the armed forces. The scheme encourages people to invest in a pension account at regular
intervals during the course of their employment. After retirement, the subscribers can take out a certain percentage of the corpus.

As an NPS account holder, you will receive the remaining amount as a monthly pension post your retirement. Subscribers have the option to open two types of NPS Accounts under the same Permanent Retirement Account Number (PRAN) namely Tier 1 and Tier II.

Contributions done to Tier I account are eligible for additional tax deduction benefits of up to Rs 50,000/- under section 80CCD (1B), over and above Rs 1,50,000/- u/s 80C.

Mutual Funds through Systematic Investment Plan: Investment in Equities is a must but timing the equity market is best avoided. SIPs help take the market timing out of investments. By following a periodic schedule, they invest at different market levels, which helps average out the cost of acquisition. For a SIP to give the best outcomes, it is important to stay invested for the long term.

Mutual Funds through Systematic Transfer Plan: For those who have liquidity already in hand, STP is an efficient tool to invest in Equities. In STP, investor schedules for transfer of a fixed amount of money from source scheme to target scheme usually by investing a lump sum amount into liquid funds and then transferring to an equity fund. This facilitates optimum utilization of funds when idle and also yields benefits through periodical transfers to a growth-oriented fund.

National Savings Certificate: National Savings Certificate is a fixed income investment scheme that one can open with any post office. A Government of India initiative, it is a savings bond that encourages subscribers – mainly small to mid-income investors – to invest while saving on income tax. A fixed-income instrument like Public Provident Fund and Post Office FDs, this scheme too is a secure and low-risk product. You can buy it from the nearest post office in your name, for a minor or with another adult as a joint account. They come with two fixed maturity periods – five years and ten years. There is no maximum limit on the purchase of NSCs, but only investments of up to Rs.1.5 lakh can earn you a tax break under Section 80C of the Income Tax Act.

Employee Provident Fund: The Employee Provident Fund (EPF) is one of the most widely-used investment schemes by the salaried class in the country. The benefits of
EPF are extended to all establishments with 20 or more employees. The tax-free interest and the maturity amount ensure a very good growth to your money.

Post Office Savings Scheme: A post office offers various types of deposit schemes for those who want to invest their money. These are also known as small savings schemes. The USP of these schemes is their sovereign guarantee, i.e., it is backed by the central government. Some of these schemes such as NSC also offer tax-saving benefits under section 80C of the Income-tax Act. However, returns would be comparatively lower than other market-linked investment avenues.

(The writer is Senior President, Head of Sales and Marketing, YES Asset Management (India) Limited) 

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