No one can beat women when it comes to saving. For generations, moms and grandmoms have been experts at saving every penny possible. Be it in the kitchen containers or an FD. These small savings have helped the family during tough times. But saving is not investing. It is necessary to invest money across assets that help you grow your money with growing inflation. Saving cash or investing in low yield avenues will not help you generate inflation-beating returns. Women are often paranoid when it comes to investing. Here are 7 simple ways women can prepare themselves before investing.
Believe in Yourself
Confidence is your most valuable asset when it comes to investing. Believe in your abilities to not just grasp the intricacies of investing but to excel at it. Bear in mind that investing is a skill, and like any other skill, it can be acquired via dedication and patience.
Thus, start your research. Be it through reading or talking to your colleagues. The more you discuss your finances and investments, the more confident you will feel. All that we need is to believe in ourselves and take the plunge. Investing isn’t rocket science. With the proper knowledge, focus and discipline, you can generate good returns.
Identify Your Disposable Income
To invest your money, you must first begin saving. To start saving, first list down your income and expenses. Determine your total expenses. The remaining income can be used to meet your savings and investments. Before starting your investments, you need to make sure you have sufficient insurance and an emergency fund.
Insurance and emergency fund is the first step toward saving and investing. Insurance will ensure your family and assets in case of any unforeseen events. An emergency fund comes in handy during a job loss or no income days or to meet any unplanned expenses.
After setting aside money for these, you can use the remaining amount to invest in the markets to generate returns. There are multiple investment avenues to choose from. Each asset class has a different investment objective, and thus you can pick the one that best suits your needs.
Identify Your Goals and Liabilities
Investing for the sake of investing is similar to travelling without a destination. In both instances, you are likely to become disoriented. Therefore, in order for your investments to succeed, you must first determine why you are investing in the first place. These are your financial objectives. Before you begin investing, make a list of all the objectives for which you require funds. Do not disregard any goal, regardless of how little or quirky it may sound. If the objective requires funding, make a list and prioritize it.
After identifying your objectives, make a list of the debts you need to pay off. Liabilities should not be carried out for an extended period of time; therefore, aim to eliminate them prior to investing. Once you’ve determined your objectives and the timeline for achieving them, you can choose the appropriate investment vehicles to fulfil them.
Know About Different Investment Options
The world of investment is broad. There are numerous investment options accessible, each with its own set of characteristics, benefits, risk-reward profile, and tax implications. Therefore, once you have determined your disposable income and financial objectives, you should educate yourself about the many investment opportunities accessible in the market. This will help you know exactly what you are investing in.
The most popular asset classes are equity, debt, gold and real estate. Depending on your investment objective, investment duration and risk profile, you can choose a suitable asset class. For instance, if you have a higher risk tolerance level, you can invest in equities either through direct stock investments or mutual funds. On the other hand, if you wish to invest in low-risk investment options, debt mutual funds can be your choice.
The type of investment option largely depends on your investment objective, investment horizon and risk tolerance levels. Mutual funds are a good option for beginners who do not have the expertise and time to manage their investments. Mutual funds are managed by professional fund managers.
Align Investments with Your Goals and Risk Tolerance Levels
Once you are well aware of all the available investment options, the next thing you should do is to pick the right asset. To begin, prioritise the investment options according to your risk tolerance. For example, if you are a risk-taker, you may like to invest in equity-oriented market-linked avenues that offer attractive returns. On the other hand, if you have a low tolerance for risk, you can choose fixed-income or debt assets. Therefore, understand your risk profile before picking an investment option.
Second, determine the size and duration of your financial goals. This will assist you in selecting avenues with appropriate investment tenures. This is to ensure that you have access to money by the time you realize your goals. This activity is critical because putting your money in the wrong asset can prevent you from efficiently achieving your financial goals.
Invest and Track Your Investments
Once you identify the investment option that aligns with your investment goals, horizon and risk tolerance levels, you can start investing. However, investing does not mean you just invest and forget. You will have to regularly track your investments to ensure they perform well. Markets are volatile. As a result, your investments also experience fluctuations. You should not panic by looking at the short-term volatility. Having a long-term investment horizon will help you overcome market volatility.
Tracking your investments from time to time will help you assess if investments are performing well and if they still align with your goals. It is advisable to rebalance your investment portfolio if the assets are not performing well or if the investment objective no longer aligns with your goals.
The most critical method to develop confidence is to continue learning about investing. Although the world of investing is large, there is no shortage of materials to assist you in getting started. You may enhance your knowledge by regularly reading blogs, investing books, and listening to industry experts.
However, do not wait until you understand everything to start your investment journey. It is practically impossible to know everything. Begin with small investments and focus on improving your knowledge about investing. Start increasing your investments once you feel more confident.
Women always give their all to any work they do, whether it is managing their homes or careers. Don’t worry about when to invest and how to invest. Start your research and just take the plunge. With consistent efforts and time, you can master it. Invest with an aim to generate growth over time and not overnight. Shortcuts to making money are never the right approach. Thus, invest only after thoroughly researching the investment scheme. The above mentioned 7 simple ways women can prepare themselves well before investing can be your starting guide.
While we are all extremely busy, women have the added obligation of juggling work and home commitments. This may make it more difficult for them to do regular portfolio reviews. Alternatively, you can also take the help of financial advisors to help you with your investment process. Identify a platform like Scripbox that can help you invest towards goals and help you easily manage your investments.