Investments for women help them plan their short-term and long-term financial goals. It allows women to invest regularly or in a lump sum to build a corpus for their future. Investing in secured deposits and market-related investment plans can contribute to a diversified investment portfolio of high returns. Discover the best ways to increase your investment amounts as a woman to build your corpus.
9 Tips for Financial Independence with Investments for Women
Here are some investment strategies for women that must be exercised for financial independence in the future:
1. Set Financial Goals
Setting financial goals is essential to start investments and achieve defined goals. Your financial goals can include saving for retirement, saving for children’s higher education and marriage, vacations or medical expenses.
Prioritise your goals and the timeline to achieve these goals. This can help you start investing early with small amounts while you build a lump sum corpus. You can additionally segregate your savings and investment accounts to ensure that the funds invested are not spent in the current period.
The right time for women to invest or begin investing is the early years of their careers. However, even if you start late, you can build a substantial corpus with planned investments.
2. Plan Your Budget
Planning your budget helps you allocate funds for various categories by defining your monthly expenses. The best way to plan a budget is to allocate 50% of your monthly income for essential expenses, 30% for non-essential expenses like recreation and 20% for savings and investment.
It helps you adhere to a strict framework of expenses, thereby reducing the need to avail loans. You can reduce your debts and the subsequent high-interest payments to save more from your monthly income.
3. Create Emergency Savings
Building emergency funds is crucial to remain financially prepared for unforeseen situations such as employment loss, expensive hospitalisation and so on. As a part of your financial plan, it is advisable to create emergency funds for at least 6 months.
This helps you avoid availing loans with high interest rates, ensuring financial independence. In addition, it eliminates the need to liquidate your investments such as fixed deposits, mutual funds and others to meet unprecedented financial needs.
4. Spend Less Than You Earn
Banks and NBFCs offer loans to their customers with multiple repayment options and charge interest rates. However, if you spend less than you earn, you can easily avoid the need to apply for loans which need to be repaid with high interest rates.
You can spend less by reducing your non-essential expenses to accumulate wealth for the future. The importance of investing for women includes the opportunity to multiply their wealth to help them live a future on their own terms.
Reducing non-essential expenses can thus help women increase their savings by small amounts. However, the power of compounding can eventually multiply their wealth to a large sum.
5. Diversify Your Portfolio
Diversifying your investment portfolio can help you reduce risks while you reap the benefits of return on investment. The best investment options for women to diversify their portfolio include fixed deposits, mutual funds, PPF, NPS and others.
You can invest in fixed deposits if you want a secured investment with easy liquidity options. Fixed deposits offer variable tenures and interest credit modes (monthly, quarterly, cumulative) for investors, based on their financial needs. However, if it is convenient for you to undertake market risks, you can choose to invest in mutual funds.
6. Plan Your Purchases
Impulse buying behaviour often results in overspending and additional expenses. Avoiding this can help you save more. Plan your purchases to increase your savings. You can look for sales when you have purchase plans lined up.
Moreover, you can utilise discount coupons to reduce your expenses. Prioritise financial education and enhance market knowledge before you plan your big purchases such as cars or vacations. For instance, identify the season of discounted car prices and off-peak season for holidays.
7. Consider Shared Subscriptions
You might have monthly subscriptions for magazines, live streaming services, gym and others. However, cancelling subscriptions that you do not need can be an effective way to increase your savings and investments.
Alternatively, you can consider a shared subscription for OTT platforms or magazines. This reduces your monthly expenses, increasing your savings for a year.
8. Create an Investment Plan
Creating an investment plan can enable you to invest proportionate amounts regularly to build a lump sum corpus for the future. You can consider monthly investments such as recurring deposits with banks or SIPs (systematic investment plans) based on your risk tolerance.
If you want to avoid market risks, choose bank recurring deposits. Further, you can invest the accumulated funds in a fixed deposit when the recurring deposit matures.
9. Consider Tax-saving Investments
Financial instruments offer multiple tax-saving opportunities to investors. One of the best secured tax-saving options is investment in tax-saving fixed deposits (FDs). If you invest ₹1.5 lakhs in a year in a tax-saving FD, you can avail exemption under Section 80C when you file income tax returns.
Notably, this type of FD comes with a five-year lock-in period wherein the interest is taxable. However, it is a secured investment with capital protection, unlike market-linked tax-saving options such as ELSS (equity-linked savings scheme) mutual funds. It can be one of the feasible investments for women who do not want to undertake market risks while looking for tax-saving financial solutions.
The Bottom Line
Investments for women are essential to ensure their financial independence. It allows women to accumulate and multiply their wealth so that they can live their lives on their terms. Women can build their retirement corpus by starting to invest at an early age. It prepares them for unforeseen financial needs. They can reap the benefits of a diversified investment portfolio with secured fixed deposits and market-linked financial solutions.
