Take your first step to financial independence

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

Furthermore, women are playing a key role in the decision-making process for themselves and their families, which has made them gather relevant knowledge of personal financing tools and manage their personal investments.

As rightly said, “A woman without investment objective is like a traveler without a destination” and this should be well adopted by every woman taking her first step to financial independence this 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 her disposal. Considering the complexities and range of financial products & 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 are taken by marketing firms in the BFSI space to propagate women-oriented schemes, plans to promote financial independence. However, as we discuss this initiative in length there is a 5-step process for every woman as a guidepost while planning their financial journey.

Making the right decision

First, it is a great thing to be financially independent, however, it is more important to stay committed to one’s investment objectives. It is advised to stick to one’s own investment amount allocated towards financial goals. There would be many distractions during the financial journey, which can procrastinate in attaining financial freedom.

Second, it is very important to withhold one’s emotions while investing. It is essential for a woman to understand the power of compounding and the benefits of investing in a diversified portfolio. Physical assets like gold serve limited purpose and overdoing things beyond its ornamental value may prove futile in the long run.

Third, it is important to understand the difference between saving & investing. Most people are satisfied with saving a major portion of their income to support their retirement. As rightly said, a 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 optimize their savings in a 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 with lucrative returns as investing in a financial product without understanding its inherent features may prove nasty and can have long-lasting impact on achieving your long-term financial goals. Since going digital is advisable, but digital is a platform and not a product itself. Digital as a medium of investing has facilitated transacting 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 & micro factors on your investments. It is not advisable to churn one’s portfolio due to lesser returns in the short term.

In today’s world, women in the process of redefining themselves have grown more independent and aware of their investments. Women’s economic opportunity in India is a rapidly changing landscape. 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 to one’s own economic benefit.

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