Husband and wife should also have one common joint financial plan for goals like buying a house, children education, travel and other household expenses
The ability to invest is a skill every woman should possess, feels Aditi Kothari Desai, Director and Head – Sales and Marketing at DSP Investment Managers. “According to some global statistics, at some point in their lives, 90 percent of women will be single, divorced or widowed, and therefore entirely responsible for their financial welfare. So it’s better that they learn sooner rather than later.”
Edited excerpts:
Q: Why is financial planning important for women?
A: Over the last decade, the world has changed a lot. Women today feel more empowered, are more confident and want to take control of their own lives. This shows up in many different ways.
A much larger percentage of young women are entering the workforce today. Financial planning is important for women today as there are that many more women who are earning their own money. Money gives them a sense of empowerment and financial freedom. To truly be financially independent, one needs to know how to make their own investments so that they can have full control of the money they have earned.
A lot of women are also inheriting money these days. It is no longer the culture to only leave money to the eldest son in the family anymore. So, times are definitely changing. At some point, when the woman inherits money from her family, it is important for her to know how to make her own financial investment decisions. After all it’s her money and she should take full charge of it.
Unfortunately, divorce rates are also increasing today, so women may get alimony with the added onus of managing it.
Today, life insurance has also made huge inroads in India, deeper than mutual funds or other financial instruments. Since statistically women outlive men, they could be the beneficiary of life insurance and after the death of the spouse. In many cases, they will be the only person making investments.
Q: Should women have a separate or joint financial plan with her spouse?
A: I would definitely recommend that a husband and wife should have their own separate financial plans. They should also have one joint plan for common financial goals like buying a house, children education, travel and other household expenses. In case of discretionary expenses, separate plans definitely come handy, so one does not judge or have control over the other in their spending habits. Fewer arguments!
Q: What are the ideology driving the WINVESTOR initiative at DSP MF and its achievement?
A: The idea behind WINVESTOR was the realisation that most women do not make their own investment decisions. So, the impetus was to raise awareness and encourage women to understand why this is important and to help them experience true financial freedom. After starting out in 2012, we have made headway and created lot more buzz. Through our financial wellness program, we have reached out to employees of almost 100 corporates. We have reached out to close to 12,000 women only through our corporate programs.
Q: What asset mix is recommended to women investors?
A: Women are no different from men in this regard. We don’t have different recommendations for men and women. It depends on each person’s circumstances and their life stage, regardless of gender.
Q: What is your investment advice to women investors?A: First off, please invest! Most women don’t. Invest regularly and start early. A good rule of thumb, especially while starting out, would be to allocate at least 20 percent of one’s salary for investments. I would definitely recommend investing the 20 percent first and then divide the rest for expenses and entertainment. Of course, when one’s salary grows, the percentage saved will grow larger because your basic needs may not grow as much (but luxuries may eat into it a bit). Be disciplined.
Teach yourself online to become a better investor. There are several resources available on our website that could help to learn.