Empowering Woman Through Financial Freedom

We know the nation is standing up for issues like women empowerment and equality, but there’s still a long way to go. Although things like dowry system, child marriages and orthodox beliefs of not allowing women to work after marriage have considerably reduced, but they still exist in villages.

In Metro cities, we have been witnessing some levels of modernization- dowry demands have reduced, and women are allowed to have a career. In spite of this modernization, major financial decisions in the house are taken by the male member of the family. Even if the woman in the family is earning, she would still depend on her husband for managing her finances. Also, even if she is earning more than her husband, it is still observed that the wife would trust her husband more than herself to select the right investment portfolio for her.

Women, not being aware of the correct investment products tend to be afraid of fraudulent investments. This gives them no option but to rely on the most trustworthy person in their lives that is either their husbands or their father or their sons. This is happening because of the lack of awareness. Men usually feel confident in their investments, because they are aware of different investment procedures like SIP, STP etc. unlike woman.

A 2012-2013 Survey regarding “Financial Experience and behavior among woman”, found that among female breadwinners, only 20% were described as “very well prepared” to make financial decisions compared  to 38% of men who described themselves that way.  Thus investments, it is observed that woman tend to keep their funds in savings accounts and men tend to invest, or as some would say they have the courage to risk their money. It is not always that the money invested by men earns marvellous returns. Men can also invest poorly like, trade in penny stocks or promote intraday trading, which might give them returns as high as 100% to 200% and might even make them loose everything in a flash.

This dirty investment method has made an impression amongst woman that if you invest in equity markets you will always lose money. Even if I talk to my Mom about the SIP investment, it makes her think that I am gambling and not investing. The Fact is that Systematic Investment Planning (SIP’s) is done to absorb the market up’s and down’s and give us a definite or proper return over a certain period of time.

How to absorb the Bumps and get a stable return through SIP?

Let us take an example of a woman named X, let’s say she earns Rs 50,000/- per month, she is an intelligent woman and decides to start an SIP of Rs 10,000/- per month for a period of say 1 year in a equity mutual funds  called “ABC”. On the other hand her friend Y is a sport investor and decides to invest Rs 1,20,000/- in the stock of “ABC” all at once. It was a good investment for both at that time. However, let’s suppose after 1 year Y reviews his portfolio for “ABC” it says a CAGR (Compound Annual Growth Rate) of 17% was gained and for X it was 12%. After 3 years, each year’s CAGR for Y was 7%, 12% and 5% respectively and for X it was 13%, 16.5% and 17% respectively.  Thus if you calculate the average return for Y over a period of 4 years then it was only 10.25% whereas for X it was 14.6%. Thus X’s investment pattern was healthy and she gained a better CAGR over Y’s CAGR.

So be smart like X and promote healthy investment like SIP… DON’T BE AFRAID OF IT!

– Prerna Porwal

Prerna is a Post Graduate in Public Relations from School of COmmunications & REputation (SCoRe), #ClassOf2017. She is currently completing her internship at Adfactors PR, one of India’s leading Public Relations firms. A firm believer in perfection, Prerna has completed her MBA in Entrepreneurship from Institute of Management, Nirma University. She has gained abundant knowledge and expertise in playing managerial roles. Understanding as well as communicating effectively with an audience is one of her core strengths.

She can be reached @Porwal_Prerna on Twitter and as Prerna Porwal on LinkedIn.

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