Read on how to enrich your life by purpose, i.e. to find depth and, a reason to get out of bed each morning, your own Ikigai.
Due to a lack of awareness, many of us hesitate when it comes to finances. However, first time women investors can start small, and build wealth using low risk options to begin with.
Welcome to Hotel California by Eagles was ringing. It kept on ringing again and again. Ritu came running hurriedly from the kitchen to pick up the phone and a smile filled her eyes. Ah! it was Anu, her best friend.
“Hey, What’s up? Kahaan thi, why did it take you so long to pick up?”, asked Anu.
“You know how it is yaar, morning hours are tied up, with Shekhar going to office and Nyra to school.”
“I know…acha listen, I have shared an investment plan with you on WhatsApp, just see quickly if it suits you”, said Anu.
“Suits me? What will I do, investment and all, this is Shekhar’s department, you send it to him, I’ll ask him to see.”
“Excuse me”, said Anu, “Why can’t you look? Please Ritu, doesn’t talk like an illiterate person. You are educated, you have worked for a good number of years and you very well know the importance of money. Right na?”
“I agree, but managing money is not my cup of tea babes, you know that, before marriage papa and now Shekhar handles investments.”
“Gosh! you sound so typical; you know what Ritu ,’Wisdom prepares for the worst, but folly leaves the worst for the day when it comes’”, fumed Anu.
Does the situation sound familiar? Well, we have come a long way but still, finance or money matters are one thing we as women keep at a distance.
Whether we are working women or stay at home, we rely on men for it, or let’s say, it is assumed to be their department. Even today in most households, women investors are few, and money management is considered a man’s job.
Another preconceived notion is, “If I don’t earn, how will I save?” Among my acquaintance, during demonetization, I have seen how women have hoarded cash, between the stacks of clothes, in the drawers, kitchen cabinets, in a mandir, saved at home after years of haggling with vegetable sellers, cash gifts, kitties.
Well, they are good at saving but the only thing they didn’t understand then was that money doesn’t grow in the cupboard. And I guess, it was because they never had a say in money matters and now, they just assumed it’s not their cup of tea – let’s just say, patriarchy took over it.
However, with the changing times, we need to understand that financial independence gives empowerment, the ability to control our lives, and to participate in decision making on important matters. And most importantly we as women need to be financially literate, whether we are working or homemakers. Irrespective of whether we are working or homemakers, we need to learn to manage our money.
It is because of a lack of knowledge or awareness that we hesitate when it comes to finances and the best way to overcome this is to make ourselves aware of financial knowledge and learn where to invest.
I am no financial advisor but with my experience, research and learning, I am sharing a few ways in which first time women investors can invest their money with no risk or minimum risk and the good part is that you can start investing with as little as one thousand rupees only.
High Liquidity. Any time withdrawal but a very low return of about 3% (varies from bank to bank). Returns are taxable. Secured only up to Rs 1 lakh.
The returns are lower than the price rise in vegetables or fruits or grocery items in a year. So, this should only have funds for daily use or emergencies.
It is one of the most popular saving schemes. If you want to invest your money for long-term appreciation, it is a great option, being totally risk averse. Another great thing about PPF is that it is exempted from tax. You can open your account with as little as Rs. 100 and you can invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000.
PPF in India offers an interest rate of Rs. 7.9 % compounded annually. It is far better than a bank deposit or hoarding money in your cupboard. The catch is that PPF has a lock-in period of 15 years, although you can partially withdraw money from the 7th year based on your need. You can open an account with any bank in your name or a minor’s name and see your money grow year after year.
This qualifies as EEE, which means that the Investment amount is exempt from tax, Interest earned is exempt from tax, and the Final amount received at maturity is also exempt from tax. What else do you need ladies? Start today!
Fixed deposit or term deposit as you may call it, is where you can put a lump sum in your bank for a fixed period of time at an agreed rate of interest. A fixed deposit offers a guaranteed return. Even if the interest rate falls after you open an account, you will continue to receive the interest agreed on before. They are again great for women investors who are new and risk-averse.
There are various types of fixed deposits. One can opt for the monthly, quarterly, yearly payout of interest or reinvestment option. Though FDs are fixed for an agreed tenure, one can still take a loan against it when you need funds. Different banks offer different interest rates, so you can always compare them. Again, the interest is usually lower than 7.35% which is the latest Consumer Price inflations number in Dec 2019. Returns are Taxable. So, this should be used only for short term or near term confirmed use of money eg. School fees, down payment for a home, etc.
So, this is another great option to invest and if you compare FDs and PPF, well, FD interest is taxable, and it has a lock-in period of 5 years while PPF is locked-in for 15 years. So, depending on individual needs, you can choose either.
It is a unique term deposit that is offered by Indian banks. It allows people to make regular deposits and earn a decent return on investment. It is like FD, however you can save every month for a set goal/objective like buying jewellery on your birthday.
ELSS is a mutual fund saving scheme. Mutual funds as the name suggests are funds that pool the money of several investors to invest in equity or debt. They are tax saving schemes; it allows taxpayers to invest up to Rs. 1.5 lakh.
These schemes have a compulsory lock-in period of 3 years and promise good returns ranging from 10-12% in the long run. It is the highest among tax saving schemes. You can invest in a lump sum or through SIP i.e. systematic plan route. You can invest as little as Rs.500. Though you can claim a tax benefit of up to 1.5 lakh, you can invest as much as you want.
There are various investment options in the market depending on your need and risk-taking appetite. I have shared the ones which have minimum or no risk with an idea to encourage women to start saving and investing.
As Clare Booth Luce, American Author and US Ambassador has said, “A woman’s best protection is a little money of her own.”
First published here.
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