"Men buy shares on Mars and women have a savings account on Venus"; I read this headline on a blog recently and smiled to myself. There has been so much press on women and investing and there is a lot of research underway to get ahead of this understanding.
Investing is a topic close to my heart, and I’d like to share my point of view.
But first, I’d like to narrate an incident that happened recently.
The gate of our apartment complex opens out to a busy two way street. As I was driving out the other day, my neighbour’s car happened to be ahead of mine. As soon as the guard opened the gate, he looked left once, vroomed his car out directly and was on his way.
I on the other hand, looked left, looked right and then left again and then carefully pulled out of the driveway onto the street and got on my way. I have been driving for more than 25 years now; yet, I have observed this phenomena time and again!
Here’s another example of my behaviour. As soon as the “yellow” light comes up indicating that it’s time to refuel the car, I head straight to the petrol pump to top it up! My husband has explained multiple times to me that I could possibly run the car for another 50km and not run out of fuel!
At times I wonder, is this, behaviour of being cautious, a woman thing?
Let’s look at the workplace. There was an HP survey that found out that women apply for a new job and Internal Job Postings, only if they meet 100% of the job description and requirements. Men, on the other hand, apply when they meet just 60% of them!
As per a study by a former Wall Street trader, John Coates, there is biological evidence that suggests that testosterone and risk-taking, go hand in hand! Apparently, women’s maternal instinct and biological factors like having a different hormonal set make them protective and therefore risk-averse.
Extrapolate this to investments. Women and I can certainly speak for myself, tend to invest more in Gold, savings accounts, fixed deposits and bond funds…mostly investment vehicles that provide lower returns than equities.
Just think about it; how many women reading this article own a Demat account? In their own name?
As someone, who’s no expert at investing or investments, but just an ordinary woman with some investible surplus, I’d like to share a few tips that have worked well for me:
# 1. Be Risk Diverse, Not Risk Averse. One advice I have received is - take more risks when you are younger and invest in equities (mutual funds or otherwise); as you grow older, move towards low-risk instruments such as bonds. While I agree with this, I believe in addition to age, one’s life situation at a particular point in time should also be a crucial factor in deciding the kind of investments.
If one is a sole breadwinner, or supporting aged parents or has more responsibilities atypical of a young age, a lower risk profile may be a better option. Only you as an individual know what that “happy place” for you is when it comes to investing.
# 2. Go SIP! A systematic investment plan is exactly that; its systematic and its planned. Great idea for us women. With the myriad different things we juggle with, on any given day, it’s one less thing to worry about.
# 3. DEAR - Drop Everything and Read. Invest time in reading and enhancing your knowledge on Investing. Read the newspaper, subscribe to a financial magazine, read the extensive research on the internet, sign up for a course…the options in this day and age are endless
# 4. Talk about finances especially with your spouse if you’re married and even with a fiancé/fiancée. What are your life goals together? Who will pay for what? If single, talk to family members, parents, or colleagues you look up to when it comes to investing your hard-earned money. Talk to your bank- almost all banks now offer investment products.
# 5. "In this world, nothing can be said to be certain except death and taxes- Benjamin Franklin”. So true! Keep in mind the impact of taxes on investments. I have learned too late in life the impact of indexation and its impact on less risky bond funds vs. the net returns on a fixed deposit. If that does not make sense, go back to point 3.
# 6. Lastly, women will outlive men. If nothing else, this fact alone, that we would require our finances to work for us for a good 20 to 30 years post-retirement, should spur us to dust off the inertia and do something. Since we will inherit wealth too, women are a potent economic force and all investment firms are eager to draw us into their fold.
Now is the time to get started on our financial wellness journey. The quicker we involve ourselves with our finances and take charge of our monies, the better it is in the long run. After all, it is about financial independence and peace of mind.
This is a guest post by Pallavi Shome, who works at a Financial Services firm. The views expressed in this article are the personal opinion of the author.