Independence Day 2023: Financial independence is highly subjective, but there remains a wide gap between women and men when it comes to investing. You don't have to be a financial expert to start investing, but yes, basic financial education empowers women to take control of their finances. Mutual funds can enhance this education through various initiatives. In a conversation, Aditi Kothari of the DSP Mutual Fund explained how women should prioritize safeguarding their financial future by taking control of their funds and seeking genuine financial advice.
How can financial education empower women to take control of their finances?
Financial education is imperative for the common investor to understand the basics of investing. The Securities and Exchange Board of India (SEBI) investor awareness programs have helped in enhancing the level of financial awareness and education. Mutual funds also do a lot in terms of educating investors. The more women learn the more they grow in confidence. The other part is that one must hire a financial advisor. By knowing which investment is best, you'll be able to ask the right questions, have a better understanding of what your financial advisor does, and you'll be better equipped to make an informed decision about your investments.
What steps can mutual funds take to enhance the financial education of their investors through their investing journey?
SEBI's mandate to mutual fund houses (MFHs) to spend 1% of their revenue on investing and financial education has boosted the level of effort put in by the mutual fund houses. As a result, India is now better than the West in terms of investors and financial education. Today, every MFH has an expert or team to manage its financial education initiatives.
Are there any specific investment strategies or options that women should consider?
I don't think there is any specific investment strategy for women that differs from any investment strategy for men. When you are young and enjoying a productive career, make sure you invest so that later, when you are married and with children, you can enjoy a passive income. Passive income can complement your salary, or if you decide to take a break from work, it can replace your salary. The best way to make a stable passive income is to invest in mutual funds through Systematic Investment Plans (SIPs). After investing in a disciplined manner if you have created a reasonably large corpus, you can transfer it into liquid funds or arbitrage funds via STP (Systematic Transfer Plan). Depending on your preferred frequency, monthly, weekly, etc., these funds invest in a certain mutual fund to maximize your wealth. It is a risk-free way to multiply your investments.
What steps should women take to prioritize safeguarding their financial future?
First, women must exercise full control over their bank accounts and funds. Often, they hand over control to the men in their lives. Once they are in control over their wealth, they need to seek genuine financial advice. Obtaining temporary insurance to protect your financial health and the health of your immediate dependents should become a woman's primary consideration. However, there is a common misconception that even if a woman does not have any dependents, she should obtain temporary insurance. Basically, a woman has to ensure that in the event of her retirement or any adverse circumstances, she and her family are dependents taken care of. Once she’s done that, you can start maximizing your wealth by investing in mutual funds.
Disclaimer: The opinions and recommendations above are those of individual analysts and are not those of the Business2Business. Investors are advised to consult with certified experts before making any investment decision.