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What is a Good portfolio Mix for Women?

Mutual Fund Industry | May 04
Today’s women are financially empowered and take their own decisions when it comes to investment matters. Financial security and wealth planning are equally important for women as they are for men. However, women’s familial circumstances, career goals and personal goals are considerably different and unique from men. Their financial lives have more unpredictability owing to situations such as marriage and maternity break. Hence, they need a different investment portfolio mix.

If you are ready to take control of your financial future, take a look at these investment options to get you started on the right track.

Mutual funds 

Most women are often apprehensive about investing in mutual funds. The primary reason is that they feel that they require knowledge of how mutual funds and financial markets work. While the basic financial literacy can help considerably, it must be noted that mutual funds are managed professionally by fund managers. It is they who decide which investment is the best for your financial goals and risk appetite. A Systematic Investment Plan (SIP) is an ideal way to begin your mutual fund investment journey. SIPs enable you to invest a predefined amount at regular intervals (weekly, monthly, quarterly, annually). Mutual Fund SIPs not only instil a disciplined approach towards investment, but also let you take the advantage of higher financial returns from stocks. Mutual funds are best suited for long-term investment goals. The earlier you start, the more corpus you can build from mutual funds.

Mutual funds are broadly categorised as equity, debt and hybrid funds. Equity funds give high return with an element of high risk, and are suitable for women who are young and have a long career/financial stability ahead of them. Debt funds offer moderate returns, but ensure the safety of your investment. If you have limited saving, restricted income flow or are nearing retirement, debt funds are a good option. However, if you are still unsure, then start with hybrid funds which invest in a mix of stocks (good returns) and bonds (fixed returns) mainly and provide moderate returns with minimal risk.

Fixed Deposits (FDs)

Yes, the good old way of putting away a chunk of savings in FDs is still a good investment option for you. You can start with an investment as low as Rs. 500 in FDs. The key advantage of FDs is that they give a definite return and have no risk element attached to them. The liquid nature of FDs is best suited for planned as well as unforeseen fund requirement. In the lows of life, FDs can act as a cushion against the financial crunch. You can also meet future planned expenditure like a down payment for a new house, purchasing a car or even going to that holiday by putting aside money in FDs! If you are looking for a tax benefit, it would make sense to invest in a Tax Saver FD which has a lock-in period of 5 years.

Public Provident Fund (PPF)

PPF is the safest haven for your investment for one simple reason that it cannot be attached to any recovery proceedings. The minimum investment you need to make every year is Rs. 500 and the maximum is Rs. 1,50,000. The only issue is the initial lock in period of 15 years. But if you are in for a long haul (which is highly recommended for any investment) then it should not really matter. PPF is best suited to meet the expenses of your child’s education/marriage or build a retirement corpus. Due to the compulsory lock-in period, you would not be tempted to withdraw it prematurely. Also, the investment in PPF is eligible for tax deduction u/s 80C.

Gold

Which Indian woman doesn’t love to own gold jewellery? But, when it comes to buying from an investment point of view, it is advisable to invest in paper format of gold via. Gold ETFs or Gold based mutual Funds. This will save your transactional costs, storage costs, and any other charges involved in physical purchase. The reason gold should be an integral part of your investment kitty is due to the fact that it is readily convertible into cash and is your safety net during dire financial emergencies. You can also accumulate it for your children’s marriage or for gifting purposes in the family. But, do make sure that gold investment does not exceed 5-10% of your wealth.

Insurance

If you are a single parent or the primary breadwinner of the family, life and medical insurance is an absolute must. Life insurance safeguards the financial future of your dependants in case of any unforeseen circumstance, while medical insurance helps you in meeting expenses arising out of any medical exigency including hospitalisation, medical bills, pregnancy and other ailments. It is recommended to take pure term insurance plan as you will get higher insurance cover for lesser premium. But, if you are looking at intermittent income to meet short-term goals such as buying a car, paying off a loan or funding your child’s school/college admission fee, you may want to consider endowment, money-back or unit linked insurance plans (ULIPs). However, these generally entail huge costs and hence, should be carefully chosen. Ideally, it is advisable to buy pure Term and plan investments  through Mutual Funds.  The investment in life insurance is eligible for tax deductions u/s 80C and medical insurance qualifies for the same u/s 80D. 

The above portfolio mix will ensure a balanced approach to investment for you. It combines good returns as well as safety.


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