Investment Habits of Indian Women

Women may be astute savers, but they are generally not active investors of the money they save. Financially and socially dependent on their husbands, they often leave all investment decisions to their spouses. They often shy away from options such as equities, and don’t often make an effort to understand equity market trends, and consider share market investments very volatile in nature, hence risky.

With greater financial literacy however, women, at least in metropolitan cities are moving beyond the traditional savings options of fixed deposits, PPF, post office savings etc. to insurance, mutual funds, bonds, equities and even real estate.

Most women investors prefer to invest in insurance products because the premiums are small and they prefer post office savings mainly so they can withdraw small amounts at times of need. Further women differ from men in their choice of the class of assets, they want to invest in. They usually consider their money safe in physical and financial assets. Of late, a women investor’s preference appears to have shifted from equity to debt capital. Women’s investment pattern also varies with age and demographics – younger, city bred women appear to be more informed about the choices available to them than their rural counterparts.

Kuntal Agrawal (1993) has noted that husbands make crucial financial decisions about family income, savings and investment, irrespective of the wives’ income, education and profession.

Pandey Ranjana (2000) in their study discovered that a majority of the woman are not engaged in their families’ savings and credit decisions.

Kulwant Sing (2004) found that women holding senior level positions did however make their investment decisions on their own. For some strange reason, the researcher also found that women in public sector were consulted more often by their husbands on investment-related matters than women employed in the private sector.

Other researchers have found a higher level of awareness among working women about the types of investment options available to them. She found that her sample of working women are motivated in their decisions by factors such as capital appreciation, safety, liquidity, speculation, tax savings etc.

However even this section of women preferred simple and conventional trading procedures while investing their money. Neelambika Pattanshetti (2012) found women’s savings and investment activities are largely dependent on their social and economic status. The researcher found that short-term training courses does help in building their confidence and motivates them to make better investment-related decisions.

The training could cover a careful study of the industry, the position of the company, she wants to invest in, and the company’s present and future prospects. A woman investor must know how to read and interpret a company’s financial results.

Venkataraman (2004) concluded that the psychology of women investors is also hugely different from men. Women are drawn to the idea of earning maximum returns, i.e. are often more ambitious than men, and many use saving from their secret accounts to invest in gold, jewelries or silk saris, without their husband’s knowledge. Sure women also prefer to invest in post office schemes.

Interestingly, Archana Sinha (2004) discovered through her research that women tend to spend almost 90% of their income on their family and only 10% on their personal requirements. Corroborating this finding, Rajkamal and Ruchi Jain (2005) found that contrary to belief, working women tend to spend less on their own needs than on family needs compared to non-working women.

Indian women’s investment decisions are largely governed by their financial goals, employment status, age, time horizon and most importantly risk appetite. Amol Agrawal (2010) found that women, generally do not have the skills to make gainful investment decisions compared to their male counterparts.

Women investors need to develop logic, rationality and emotional stability as investors, or the result could be stress, anxiety and financial distress. They have to accept the fact that no investment is free of all risk. The key for surviving the downturn is to identify the risk, assess it and then make an investment decision.

Market-linked investments are cyclic in nature. A fear of the downward movement in the share price should not lead to acute anxiety and hamper the woman investor’s decision-making process. Above all, they need to develop patience, and control over their emotions.

Women investors would do well to remember that when share prices bottom out, it’s usually for a short duration. As soon as the prices begin to rise again, she should sell and cut her losses. Eventually, she must develop the courage to take a few chances and the confidence to stand by her decisions with a sense of responsibility. Developing this kind of an attitude would protect her against the rough and tumble of the capital market.

Why Do Personal Financial Planning?

There are many advantages of personal financial planning. A few are enumerated below:

• Helps in making wise choices about the use of your limited financial resources throughout your lifetime.
• You can wield increased control of your finances by avoiding debt, bankruptcy, and dependence on others for your economic security.
• Family security resulting from well-planned and effectively-run financial affairs

A stress-free life, and freedom from frequent financial worries

The financial planning can be a simple, six-step procedure if you are able to:

Correctly assess your current financial situation

This would need a careful consideration of your present-day family income, savings, living expenses, and debts. Draw up a list of your current asset and debt balances to get a sense of where you stand, before you start your financial planning activities.

Chalk out all your major financial goals for the future

This could be a daughter’s wedding, child’s education etc. The purpose of this exercise is also to learn to differentiate between essential and luxury spends. There is a huge difference between needs and wants. Further, be specific about what targets you want to achieve and when.

For example, instead of wishing a “steady retirement income” or wanting your children to attend "good" schools, you need to quantify what "steady" and "good" mean to you, so you will know when you cross that goal post.

Identify alternative financial resources to tap into during an emergency

This is crucial for a secure future. Although several factors will influence the easy availability of alternate resources, it’s important to do a reality check. Considering all possible alternatives will help your make better decisions. Your final decision would also depend upon your current life situation, personal values, and your present-day financial condition. All these factors will impact your final decision.

Draw up a water-tight financial action plan

Before taking step, one must re-assess all the long and short terms plans. Set measurable goals. Your priority will automatically come into focus, and the right plan will emerge.

Keep reviewing and tweaking this plan as per your changing life conditions

Financial planning is a dynamic process. You will regularly need to take stock and re-examine your financial decisions. Changing personal, social, and economic factors all change, and so should your financial planning.

As mentioned earlier, women investors tend to restrict their choices of investment assets. The restrictions arise from their past conditioning and life’s circumstances. Identifying these restrictions will affect improve their investment outlook and give them more confidence.

Liquidity is often a prime concern to women. They need the assurance of knowing that an asset class can be sold easily, during emergency and still fetch a good price. They should be informed about ways and means of disposing off their assets at short notice. Armed with this vital piece of information, they can be encouraged to allocate a certain, fixed portion of their investment portfolio to liquid assets.

Women’s unique investment needs also vary with age. Retirement, housing and children’s education, as well as several other factors would change their priorities and demand corresponding adjustments in their investment portfolio. Most women investors, like their male counterparts, have their own investing styles: some have a bigger risk-appetite than others, and could be easily lured into make speculative investments. Others prefer the safety net of bank deposits, not realizing that the value of this portfolio is likely to erode with inflation.

The investing style varies in accordance with age, personality, personal experience, and financial circumstances to cite a few. For instance, a woman approaching retirement, who may have very few financial responsibilities, may still be risk-averse, if she has already faced many ups and downs of life, and make a conservative investor. This is what makes every investor – man or woman – unique in his/her investment style.

Most women investors would fall somewhere in between these two extremes, and could be persuaded to take a calculated amount of risk, with the expectation that they’ll be rewarded with higher returns, over a period of time.

The idea behind developing good financial planning habits such as saving, budgeting, investing and regularly reviewing finances by women early in their life is to prepare them to meet life’s unforeseen, unfortunate events and be able to handle emergencies. All said and done, financial planning is a common sense approach to managing finances to meet life’s goals. Done wisely, it can secure someone’s future.

How to Incentivise Savings and Investments

Creating more opportunities for acquiring various forms of financial assets is an important pre-requisite for raising the saving rate of a country. This can easily be done by expanding the existing banking facilities, and providing attractive rates of interest.

Price stability also induces higher savings. This can happen only when inflation is kept in check. The two most popular instruments of saving popular among are provident fund and life insurance. Both these instruments can be made more attractive to encourage savings.

Life is a continuous journey which never ends. It is not a bed of roses but it is a bed of thrones. It is full of hardships and difficulties. We have to face calamities and catastrophes at every step. It is often said that life is full of challenges and struggles. In order to make our lives great and comfortable, we should make strenuous efforts.

Life is incomplete without any destination. In our life, at a specific point, we think that this is our destiny and there are no more efforts to do. But, actually, this is not our destiny. It is not much easy to find destination. The journey to success continues. We have to do more and more struggle to achieve our goal. Our goal or destination strengthens and emboldens us.

As I am moving on with my life and doing things that must be done, I am finding that more and more people are tuning into what I have to say and how I am living my life. I opened my eyes in a small village. When I was 2 years old, my father died with Hepatitis. That was all my mother’s struggles and efforts that she educated us. I carry on my studies in a primary school of that village. As you know that disappointments have been the source of the greatest genius, inventions, and successes.

Disappointments and tragedies force us to think, look, listen and make radical changes in our lives. Some of the disappointments in my life have made me realize the extent of strength I had within me that I never knew of. It’s the nature’s way of teaching us lessons necessary for us at the particular moment. Allah has made us in such a way that we must move on in our life. All the moments in our life good or bad comes to teach us things that we have to learn at that moment. Each of us is here to find the dreams and to achieve our destination. That’s why I struggled hard to find destination. I passed my Matriculation with First division in that primary school. But this was not my destination. My destination was something else, for which I would have to wrestle more and more. I got admission in intermediate pre-engineering. There in college, I studied upon scholarship. My family supports and my mother’s prayers were always with me. I learned the worth of hard work and patience. I passed my intermediate with first division. I realized that when we are sure that we are on the right road, there is no need to plan our journey too far ahead.so, with that courage and believe in myself I passed UET entry test and got admission electrical engineering in UET KSK. At the start of my university, I got nervous and scared when I have to give presentations. But as time passed I overcome my fear, and I make myself a powerful individual. I feel that I have no need to burden myself with fears and doubts as to the obstacles that may bar my progress.

Sometimes, things happen to you that may seem horrible, painful and unfair at first, in reflection you find that without overcoming those obstacles you have never realized your potential, strength, and willpower.