A Guide for Women to Invest in Mutual Funds


According to the World Economic Forum’s Global Gender Gap Report 2021, India fell 28 places to rank 140 out of 156 countries and the gender gap widened to a staggering 62.5%. The report also found that the estimated earned income of women in India is only one-fifth of that of men.

Considering the disadvantage most women in the country find themselves in, it is essential for them to invest their money wisely. However, women also have a long way to go in terms of financial literacy and inclusion. Yes, positive changes are underway with the younger generation of women taking the mantle of investing their money wisely without having to relegate the responsibility to the male members. However, these women are in the minority and the majority of Indian households consider testosterone to be a prerequisite for effective financial management. The situation is worse for older women, most of whom have known that their husbands give them a monthly allowance as the only legitimate link to family finances.

Therefore, many women feel that they do not need to invest as it is the job of husbands. Those who understand the importance of investments do not know how to go about it. Lack of knowledge of how financial products work dissuades them from saving and investing with confidence, and many end up channeling money into unsuitable asset classes.

Fortunately times are changing. The advent of technology has fostered the creation of a multitude of user-friendly personal finance applications. Investing in a variety of instruments through these apps has become a smooth experience and more importantly it has reduced the need for retail investors to contact brokers. This has greatly benefited women investors.

Asha Khurana is a 45 year old housewife who joined the investment movement two years ago. After hearing a few success stories from her circle of friends, Khurana felt confident enough to invest her money slowly. “I started my investment journey by investing in mutual funds. Two of my closest friends had done that and they gave me sort of a demo on the process of investing in mutual funds through monthly SIPs (systematic investment plans). I found it to be extremely practical, easy to understand and most importantly I could invest with small amounts and not have to wait to be able to accumulate a larger amount. For housewives like me, it can take forever to build up a savings fund, ”she says.

Urmila Singh, a financial planner at S9 Financial Planners, says: “Even today, women leave their money unused by storing money in a dabba or using it to buy gold. But it’s high time for women to step away from these entrenched notions and move into asset classes that may offer better returns. Those who have not yet started investing should start by determining their risk appetite and tolerance for risk. Risk appetite indicates the level of risk an investor is willing to take, while risk tolerance refers to the risk that an investor’s finances can actually handle.

Aditya Birla Sun Life Mutual Fund has launched a special initiative called For Her which emphasizes the financial inclusion of women and intends to provide them with means of financial security.

While it may seem intimidating for many women to decode the level of risk they must take and the corresponding investment classes, the internet age has made it easier to understand these concepts and even seek advice from them. experts. Khurana says, “There is a lot of information available on the Internet and mutual fund companies have also made efforts to make quality information accessible to investors. Yes, I also sought expert advice, but a lot of self-learning about the investment world has been possible thanks to the internet. In addition, since I invest in mutual funds that offer simplicity, diversification and flexibility, I feel more confident and less stressed about my investment strategies, which was not the case before when I was was trying to invest in other instruments.

Singh advises, “Once you’ve got a clear picture of your risk appetite and risk tolerance, the next step is fund selection. This can be divided according to short, medium or long term goals. For short term debt, funds are the best choice because they are very liquid and you can park your money for a day or even a year. Hybrid funds are best suited for medium-term goals because they offer balanced exposure to stocks and debt. If the time horizon is more than 7-10 years, then equity mutual funds are the way to go – they are great for goals like retirement or children’s education. Start small in each asset class and once you feel confident and understand the process, tie your goals to your investments.

While the path to the meaning of investing can take a lot of learning for female investors, it can also help unlearn perceptions of money that are of little value at this age. Khurana says: “More than anything else, my experiences in the investment field made me realize that women can skillfully manage their finances without men and that it is high time that the stereotype that the portfolio is. a man’s responsibility is broken.

Key points to remember

– Do not hesitate to seek professional help if you are an amateur investor. Money spent on advice can save you from making the wrong investment decisions that can lead to colossal losses.

– If you are a woman who wants to start investing but don’t have the confidence to do so, ask your friends and family to join you in learning the ropes of financial management. It would bring an element of fun to the whole process and staying motivated will be easier.

– Invest in mutual funds that offer simplicity, diversification and flexibility

– Once you have got a clear picture of your risk appetite and risk tolerance, the next step is fund selection. This can be divided according to short, medium or long term goals.

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


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